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How does inventory affect the financial statements?

Changes in inventories and incorrect inventory balances affect your balance sheet, the financial statement that is a snapshot of your companys worth based on its assets and liabilities. An incorrect inventory balance can result in an inaccurately reported value of assets and owners equity on the balance sheet.

How to do a financial inventory?

Go over your paychecks, bills and credit card statements. Hang on to cash-register receipts from stores, gas stations, and restaurants. The more actual expenditures you can pinpoint, the more youll know about your spending habits when youre through.