Abstract This article presents a study on holding gains and losses and the evaluation of management in accounting in the U.S. The result is achieved simply by valuing cost of sales at end-of-period prices. Holding gains are calculated as units of goods available for Sale, beginning inventory plus purchases, valued at end-of-period prices minus the sum of opening inventory and cost of purchases. Then operating profits will be independent of the amount of end-of-period purchases and all gains or losses from fluctuating prices will be allocable to purchasing management.
Davidson et al. (Mon,) studied this question.