Introduction Q While sales and purchases are the focus of operations, inventory is no less important. Inventory costing and evaluation methods can substantially influence the bottom line. Since Chinas listed companies were permitted to write down inventories in 1998, inventory has long been criticized as the "income adjustor,. besides, inventory costing policies and the scope of inventory can also significant change the current and future years income numbers Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 33 Introduction ⧫ While sales and purchases are the focus of operations, inventory is no less important. Inventory costing and evaluation methods can substantially influence the bottom line. Since China’s listed companies were permitted to write down inventories in 1998, inventory has long been criticized as the “income adjustor”. Besides, inventory costing policies and the scope of inventory can also significant change the current and future years income numbers