An audit trail allows you to trace a source document to its final effect on the financial statements or vice versa. Describes what the audit trail would be for an inventory purchase.

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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.