Business & farm
When using the cash method of accounting the cost of every item is expensed on the day that the money is spent. So the expense for products is everything that left your bank account during the calendar year. Accrual is taking the expense in the second that it is billed regardless of when the bill is paid.
You may be confusing this with cost or market for inventory costs. When deciding how to value the inventory you can use the actual cost of the product that you've paid for or you can use the market value of the product as it sits on your shelf.
In TurboTax when entering your business information you will come to this screen and tick this box-
Once you have done that you will reach this screen and you will need to enter your inventory here.
The next screen asks for you to enter your inventory numbers for the beginning and end of the year.
Whether you use Cash or Accrual accounting only changes the way you account for your income and expenses. It's effect on inventory is relatively minor.
