Accounting principles inventory

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This discussion explores why the difference in a company's inventory value between two years might not match the 'Changes in inventory value' figure on the Profit & Loss statement. Both are calculated using the lower of cost or market price, but the P&L figure reflects the net change during the period, not just the year-end balance difference.

Rahul Jain

Rahul Jain (Querist)

23 December 2022 Why is there a difference between change in inventory value and the difference between inventory vale of previous year and current year?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

26 December 2022 It's valued on the basis of cost or market price which ever is less.
Hence inventory value change.

Rahul Jain

Rahul Jain (Querist)

26 December 2022 Actually my question is that in the balance sheet item if you calculate the difference between the value of inventory from previous to current year of any company it is different from the item of P&l 'Changes in inventory value'. However both method for calculation of inventory is same for balance sheet and P&L is the same

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

26 December 2022 I can't understand your query.
Call me. 9443357248

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