Final answer:
Cost accumulation for inventory valuation serves the purposes of external reporting and internal profit measurement, providing accurate financial information for stakeholders and helping companies assess their profitability.
Step-by-step explanation:
In cost accumulation for inventory valuation, there are two main purposes: external reporting and internal profit measurement.
For external reporting, companies need to determine the cost of their inventory to accurately present their financial statements. This includes calculating the cost of goods sold and the value of ending inventory. External stakeholders, such as investors and creditors, rely on this information to assess a company's financial performance and make informed decisions.
Internally, the cost accumulation process helps companies measure their profitability. By accurately valuing inventory, companies can calculate the cost of goods sold and gross profit, which are important metrics for assessing the efficiency of their operations and making strategic decisions.