What is the importance of understanding various inventory valuation methods in determining the quality of reported profits?

1. What is the importance of understanding various inventory valuation methods in determining the quality of reported profits?

2. Even though firms follow the accounting rules (GAAP) when presenting their financial statements, it is still possible for conflicts of interest to exist between what management wants investors and creditors to see and the economic reality of transactions. Explain how this can occur.

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APA

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