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Question: no area of accounting provides more opportunities for subjectivity and...

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No area of accounting provides more opportunities for subjectivity and creative accounting than the valuation of inventory. This is illustrated by the report Fraudulent Financial Reporting: 1987–1997 – An Analysis of U.S. Public Companies prepared by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Discuss why the accurate valuation of inventory is so crucial if the financial statements are to show a true and fair view.

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