B.COM Unit – 4 ( CORPORATE SOCIAL RESPONSIBILITY ( CSR ).pptx
Inventory valuation methods
1.
2. Inventory
Goods which have been purchased or manufactured and are yet to be
consumed and sold are termed as inventories. As per AS-2 inventory/stock
is 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”
3. Needs of Inventory Valuation
Determination of Income
Determination of financial position
Determination of policies
Business sale
Buying a business
Collateral for tenders
1. Periodic System
SYSTEMS OF STOCK TAKING:
2. Perpetual System
4. Methods of Inventory
Valuation
First in First Out (FIFO)
Last in First Out (LIFO)
Highest in First Out (HIFO)
Next in First Out (NIFO)
Average Cost Method
Specific Identification Cost Method
Base Stock Cost Method
5. FIFO Method
Que: The following information is available for the month of January 2003, of a
trading concern:
Jan 1 Inventory 200 units @ Rs 70 14000
Jan 5 Sales 100 units
Jan 10 Purchases 550 units @ Rs 80 44000
Jan 15 Sales 400 units
Jan 20 Purchases 150 units @ Rs 90 13500
Jan 25 Sales 300 units
Jan 30 Purchases 100 units @ Rs 100 10000
6. LIFO Method
From the following particulars, calculate the value of inventory on Jan 31, 2003, by Last
In-First out Method:
Receipts
Jan 1 Inventory in hand 2,000 units @ Rs 7 14,000
Jan 10 Purchases 11,000 units @ Rs 8 88,000
Jan 20 Purchases 3,000 units @ Rs 9 27,000
Jan 31 Purchases 4,000 units @ Rs10 40,000
Issues for sale
Jan 5 1,000 units
Jan 12 2,000 units
Jan 15 4,000 units
Jan 25 5,000 units
7. Average Cost Method
Date Receipt Quantity Rate Issue Quantity
Jan 1 200 10 -
Jan 10 300 12 -
Jan 15 - - 250
Jan 20 250 13 -
Jan 31 - - 200
Stores Ledger
Receipts Issues Balance(Inventory)
DATE
(1996) Qty. Rate Amount Qty. Rate Amount Qty. Rate Amount
Jan 1 200 10 2000 - - - 200 10 2000
Jan 10 300 12 3600 - - - 500 - 5600
Jan 15 - - - 250 11 2750 250 - 2850
Jan 20 250 13 3250 - - - 500 - 6100
Jan 31 - - - 200 12.50 2500 300 - 3600