A new accountant prepared the following general journal entry on March 31, 2024, for Rock Castle Construction. The general journal entry includes an error. Choose the best explanation of the error from the choices provided. DR: 12000 Inventory $5,575 CR: 10100 Checking $5,575 Purchase of inventory Please add checkmark next to the correct answer(s). 1  Inventory should have been credited, not debited. 2  The account # for inventory is incorrect; should be 12100. 3  The checking account should have been debited, not cr

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.