| Inventory is an important flow of business asset, is the focus of production and operation; Inventory items are widely variety and have strong liquidity. That leads to inventory valuation method involves many complex issues, also makes use of the accounting policy choice of inventory valuation an effective means of earnings management for many companies. In 2006, China issued the new accounting standard, it is also the end of the popular selection of LIFO and FIFO. In this paper, through making an empirical study of listed companies in Shanghai Stock Exchange, we find that the laws and the factors of inventory valuation method chosen after LIFO cancelled. Industry, scale, the efficiency still have a significant impact for the inventory valuation method chosen. However, agency cost hypothesis has not been verified. This study demonstrates that the smaller companies or the company facing better opportunities tend to use the FIFO method, the other companies tend to use weighted average method.After the choice of methods for inventory valuation after the new accounting standards, this paper analyzes the earnings management situation by the inventory valuation:the space of using inventory valuation methods for profit after adjusting compressed. By the provision for the final assets impairment adjusting profit level has become an important means of earnings management. Many enterprises use provision for inventory write-down whitewash financial statements even corruption. Constructing the corresponding inventory valuation internal control system to prevent the management the choice of operation profit, whitewashing statements by using inventory valuation methods has become key! This paper analyzes the characteristics of internal control inventory valuation, development as well as our country enterprise internal control system, and the general problems. Hope our enterprises builde more reasonable inventory valuation internal control system. |
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