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InventoryGoods which have been purchased or manufactured and are yet to beconsumed and sold are termed as inventories. As ...
Needs of Inventory Valuation Determination of Income Determination of financial position Determination of policies Bus...
Methods of Inventory        ValuationFirst in First Out (FIFO)Last in First Out (LIFO)Highest in First Out (HIFO)Next in F...
FIFO MethodQue: The following information is available for the month of January 2003, of atrading concern:Jan 1      Inven...
LIFO MethodFrom the following particulars, calculate the value of inventory on Jan 31, 2003, by LastIn-First out Method:Re...
Average Cost MethodDate            Receipt Quantity                    Rate              Issue QuantityJan 1              ...
Weighted Average Cost Method                Receipts               Issues             Balance(Inventory)DATE(1996)   Qty. ...
Inventory valuation amit
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Inventory valuation amit

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LIFO,FIFO & AVERAGE STOCK

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Inventory valuation amit

  1. 1. InventoryGoods which have been purchased or manufactured and are yet to beconsumed and sold are termed as inventories. As per AS-2 inventory/stockis an assets which:(i) Has been kept for sale during course of the general business, or(ii) Is in manufacturing process for sale, or(iii)To be consumed for manufacturing of product or service for the purpose of sale. 1. Stock of finished goods 2. Stock of work-in-progress Inventory includes: 3. Stock of raw materials 4. Stores & spare parts 5. Loose tools 6. Waste or by-product America- “Inventory” England- “Stock”
  2. 2. Needs of Inventory Valuation Determination of Income Determination of financial position Determination of policies Business sale Buying a business Collateral for tenders 1. Periodic SystemSYSTEMS OF STOCK TAKING: 2. Perpetual System
  3. 3. Methods of Inventory ValuationFirst in First Out (FIFO)Last in First Out (LIFO)Highest in First Out (HIFO)Next in First Out (NIFO)Average Cost MethodSpecific Identification Cost MethodBase Stock Cost Method
  4. 4. FIFO MethodQue: The following information is available for the month of January 2003, of atrading concern:Jan 1 Inventory 200 units @ Rs 70 14000Jan 5 Sales 100 unitsJan 10 Purchases 550 units @ Rs 80 44000Jan 15 Sales 400 unitsJan 20 Purchases 150 units @ Rs 90 13500Jan 25 Sales 300 unitsJan 30 Purchases 100 units @ Rs 100 10000
  5. 5. LIFO MethodFrom the following particulars, calculate the value of inventory on Jan 31, 2003, by LastIn-First out Method:ReceiptsJan 1 Inventory in hand 2,000 units @ Rs 7 14,000Jan 10 Purchases 11,000 units @ Rs 8 88,000Jan 20 Purchases 3,000 units @ Rs 9 27,000Jan 31 Purchases 4,000 units @ Rs10 40,000Issues for sale Jan 5 1,000 units Jan 12 2,000 units Jan 15 4,000 units Jan 25 5,000 units
  6. 6. Average Cost MethodDate Receipt Quantity Rate Issue QuantityJan 1 200 10 -Jan 10 300 12 -Jan 15 - - 250Jan 20 250 13 -Jan 31 - - 200 Stores Ledger Receipts Issues Balance(Inventory)DATE(1996) Qty. Rate Amount Qty. Rate Amount Qty. Rate AmountJan 1 200 10 2000 - - - 200 10 2000Jan 10 300 12 3600 - - - 500 - 5600Jan 15 - - - 250 11 2750 250 - 2850Jan 20 250 13 3250 - - - 500 - 6100Jan 31 - - - 200 12.50 2500 300 - 3600
  7. 7. Weighted Average Cost Method Receipts Issues Balance(Inventory)DATE(1996) Qty. Rate Amount Qty. Rate Amount Qty. Rate AmountJan 1 200 10 2000 - - - 200 10 2000Jan 10 300 12 3600 - - - 500 11.20 5600Jan 15 - - - 250 11.20 2800 250 11.20 2800Jan 20 250 13 3250 - - - 500 12.10 6050Jan 31 - - - 200 12.10 2420 300 12.10 3630

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