Best Hardware uses a periodic inventory system. Its inven-tory was $38,000 at the beginning of the year and $40,000 at the end. During the year, Best made purchases of mer-chandise totaling $107,000. Identify all of the correct answers:a. To use this system, Best must take a complete physicalinventory twice each year.b. Prior to making adjusting and closing entries atyear-end, the balance in Best’s Inventory account is$38,000.c. The cost of goods sold for the year is $109,000.

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.