Problem: As officers of One-Hundred-Percent Vitamin Co., Sally and Ed have hired you as an outside accountant to advise them on how the accounting treatment can affect their revenues and expenses. The accounting issues of interest include cash versus accrual basis of accounting, inventory costing methods, inventory valuation methods, lease versus purchase of fixed assets, and the appropriate handling of R & D costs in vitamin development.
Research and explain how "inventory valuation (market, cost, or lower of cost or market)" would affect profit (either by increasing or decreasing profit). In addition, also designate which method is approved by GAAP. Summarize your findings.