Getting a Current Asset Balance
Chapter 3 goes into considerable detail on the topic of valuing inventories. However, because a company's inventory is also a current asset, some of the mechanics of moving inventory asset amounts among various accounts as the balance sheet is being prepared are discussed here.
At the end of an accounting period, when you are preparing an income statement and a balance sheet, it is usual to bring the balances of the various revenue and expense accounts to zero. The reason for this is that the next time you prepare these statements, you want them to reflect the activity that takes place during the next period.
A starting value of zero in the revenue and expense accounts allows you to accurately determine the profit ...
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