Which inventory valuation methods can be used at the end of the year?

The correct answer involves understanding the various inventory valuation methods that provide a way to assess the value of inventory for accounting purposes at the end of the year. The weighted average, retail method, and specific identification are all methods that can be used effectively to calculate the ending inventory value.

Weighted average calculates inventory cost based on the average cost of all similar items, ensuring fluctuations in prices don't overly skew the value. This method is particularly useful for companies that have large quantities of similar items and engage in high volume sales.

The retail method is commonly used in retail businesses to estimate inventory based on the cost-to-retail percentage, which allows retailers to calculate inventory levels without a detailed inventory count. This can streamline the end-of-year accounting process.

Specific identification involves tracking the actual cost of each specific item in inventory, which is especially applicable for businesses dealing in unique, high-cost items. By directly associating each item with its cost, companies can provide an accurate reflection of their inventory value.

These methods provide flexibility and accuracy in reporting inventory value at year-end, taking into account the nature of the business and the type of inventory held. Understanding these methods helps in applying the best practices for inventory valuation in various scenarios.