The Wilson Company purchased $26,000 of merchandise from the Poole Wholesale Company. Wilson also paid $1,900 for freight costs to have the goods shipped to its location. Which of the following statements regarding the necessary entries for the transactions is true? Wilson uses the perpetual inventory system.   Multiple Choice   Total increases to the inventory account would be $26,000.   Total increases to the inventory account would be $1,900.   Transportation-in would be increased by $1,900.   Total increases to the inventory account would be $27,900.

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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.