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Valuation of Inventory

Valuation of Inventory. Inventory refers to the stock of goods in which a business deals on a regular basis. Valuation of Inventory. AS-2 Valuation of Inventories. Valuation of Inventory. Definition of INVENTORY as per AS 2Assets held a) for sale in the ordinary course of business

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Valuation of Inventory

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    1. Valuation of Inventory For Management Student

    2. Valuation of Inventory Inventory refers to the stock of goods in which a business deals on a regular basis

    3. Valuation of Inventory AS-2 Valuation of Inventories

    4. Valuation of Inventory Definition of INVENTORY as per AS – 2 Assets held – a) for sale in the ordinary course of business b) in the process of production for such sale c) in the form of materials and supplies to be consumed in the production process or in the rendering of services

    5. Valuation of Inventory Objectives of Inventory Valuation Determination of Income (Gross Profit) Determination of Financial Position (Balance Sheet) Determination of Liquidity (Ratio Analysis) Legal Obligation (Cos. Act, AS)

    6. Valuation of Inventory Methods of Valuation of Inventories First In First Out Method (FIFO) Last In First Out Method (LIFO) Weighted Average Price Method

    7. Valuation of Inventory First In First Out Method (FIFO) ADVANTAGES Values the stock closer to the current market price - most recent purchases Based on cost - no unrealised profit Realistic - normal procedure of utilisation/selling those materials/goods which have been longest in stock.

    8. Valuation of Inventory First In First Out Method (FIFO) DISADVANTAGES Involves complicated calculations and hence increases the possibility of clerical errors. Comparison between different jobs using the same type of material becomes difficult.

    9. Valuation of Inventory FIFO method is suitable for Perishable goods No frequent purchases Moderate fluctuations in the price of materials Material easily identifiable as belonging to a particular lot

    10. Valuation of Inventory Last In First Out Method (LIFO) ADVANTAGES Takes into account the current market conditions Based on cost - unrealised profit

    11. Valuation of Inventory Last In First Out Method (LIFO) DISADVANTAGES Involves complicated calculations

    12. Valuation of Inventory Last In First Out Method (LIFO) Suitable for materials which are of a non-perishable nature

    13. Valuation of Inventory Thank You

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