When a debt is written off, it is removed from the balance sheet as an asset because the company does not expect to recover payment. On a balance sheet, writing off inventory entails an expense debit for the value of unusable inventory and a credit to inventory. When all other collection methods have been exhausted, […]

External parties such as investors, creditors, and governmental agencies look to this amount to evaluate a company’s performance and how it affects them. Managers and others within a company use operating income as a measure for evaluating and improving operational performance. Recognize that a reduction in inventory during a period will cause the opposite effect […]

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