Inventory is unique because it has characteristics of both transactions/events and account balances. Here’s why:

Transaction/Event Aspects:

• Inventory involves transactions like purchases and sales throughout the period
• Movement of inventory (transfers, returns) represents events
• Cost flows (FIFO, LIFO, weighted average) are tied to transactions

Account Balance Aspects:

• Inventory is reported as an asset balance on the balance sheet
• Physical inventory exists at a point in time
• Valuation is assessed at the balance sheet date

Because of this dual nature, inventory-related assertions cover both categories:

Transaction/Event Assertions for Inventory:

1. Occurrence – All recorded inventory transactions actually took place
2. Completeness – All inventory transactions are recorded
3. Accuracy – Transactions are recorded at correct amounts
4. Cutoff – Transactions are recorded in the proper period

Balance Sheet Assertions for Inventory:

1. Existence – Recorded inventory physically exists
2. Rights and Obligations – Entity has rights to the inventory
3. Completeness – All existing inventory is recorded
4. Valuation – Inventory is recorded at proper amounts (including consideration of net realizable value, obsolescence)

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