If a company changes its inventory method, inventory cost of goods sold. are affected.
List of Inventory Methods Definition
Inventory management is the process by which a business transfers its actual expenses from its inventory of current assets to the cost of items sold, which is shown on its income statement.
The sequence in which product costs are deducted from inventory will affect both the inventory valuation and the amount reported as the cost of goods sold since product costs may increase when they are reordered or acquired (and therefore the gross profit, operating income, net income).
The cost flow assumption refers to the sequence in which costs are deducted from inventories.
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