inventory valuation

Meaning of the list

This period list means 1) finished goods; 2) work in progress and 3) raw materials and components.

List evaluation objectives Income determination

It is possible only by evaluating the list to ensure the true income of the business. Gross profit is higher than the sale of more than the items sold. The cost of the merchandise is determined by the deduction of adding inventory and closing the list of purchases. Financial position assessment

At the end of the period, the list is shown as an existing asset in the complete scripts. The inventory should be done correctly to avoid disclosing wrong financial status of the business. List system Periodic index system

On the basis of this system, it does not provide information about the quantity and value of the goods in hand. The total value of the goods is obtained by adding the value of the used materials at the end of the period, by reducing the value of the list, at the beginning of the period, at the beginning of the period, the price of the list is purchased. Perpetual list system

This is also known as an automated list system. In the case of this system, the store book balances the raw material on a continuous basis, works in progress and gives finished goods. The objective is to get the information of the correct amount of every stock. It provides more stricter control over the contents of the material. Physical stock can be verified regularly with a stock record. Methods of evaluation of the list List cost

This is the total cost of purchase, the cost of conversion and the other costs of bringing the goods to your current location. Not only includes the cost of payment for the acquisition of the goods, but it also produces them at every cost. Used for use in Specific identity method

According to the specific identity method, each item of the list is identified with its cost. Establish the value of the total list of different cost of identification. This method is used when goods or goods has been purchased for a specific job or customer. FIFO - First time in the outside method

FIFO - For the first time in the first outside method, the first goods received are being sold for the first time. Lefo- The last method in the first out

Those goods that were purchased last time are being sold for the first time. First method of extracting the highest

According to this method, the inventory of goods should be valued at the lowest possible value. The goods which are purchased from the highest or the highest value are sold first. The date of purchase of this goods is not considered. This method is appropriate when the market is volatile, because the cost of huge value items can be recovered from production or sale as soon as possible. Unlisted list method

This method is made on the basis of maintaining all the contents in each list in a minimum quantity of energy. This volume is known only from the underlying list. It is understood that the underlying list is made from the list purchased previously. And so it is always valued at this price and it is shown as fixed asset. If the quantity is above the underlying list, then that quantity should be valued by the appropriate method. First method to give value to the next list

This method tries that the goods which are issued or sold at the actual cost, are priced close to the possible market value. In this method, the cost of selling goods is made valuable from the next price. The purpose of valuing the next price is that the price of the inventory or the goods which have been sought but not received. The inventory evaluation list is determined by reducing the cost of goods, which are sold with the total value of the purchased inventory. Weighted average duration method

The weighted average duration method is based on the assumption that when all goods are considered as a single list, then they lose their symmetry or identity of the goods. Therefore there is no specific consignment in the list. Therefore the price of the goods has been kept on the basis of average prices. This goods is weighted according to the amount purchased at each price.

Net recovery value or net recoverable value

The net realization value means that "in the general course of the business, the cost of completing the estimated sale price and the estimated cost is necessary to make the sale." The net recovery value may be calculated after all taking into account all expenses which are to be spent to make the sale.

The list should always show on cost or net recovery value (whichever is less). Comparison with the net realization value of different commodities and historical costs can be realized by any of the modest methods: - Set or total list method

According to this method, the total cost of different items in the list is calculated. The total value received is compared to the total net recovery value. Whatever value of these two values ​​is, that value is used. Group method

According to the method, a group of homogeneous objects is formed in the list. The cost and net recover value of each group is calculated. The cost or net recover value of each group, whichever is lower, is used for inventory evaluation. Item by Item Item

According to this method, the cost and net recovery value of each item of the inventory is ascertained. Then all items are valued less than the cost or net realization value. Anticipated price fall

The evaluation principle only applies to the list at low cost or pure realization value only when the value of the price has actually declined and there is a possibility of price declining in future. Accounting Standard 2: Evaluation of the Listings an objective

A primary issue in accounting for the listing is the determination of the price. The list is done in the financial statements. Only then are getting recognition in respective revenues. This determines the value of the cost of the list and the realization is included. Area

In addition to this statement should be applied in the accounting for the other list - In the progress that arises under construction contracts, work in progress in the normal course of business - work, debentures and other financial instruments. Organized as a stock in the business. List cost

The cost of the inventory, the cost of conversion and other costs should include all costs of purchase. purchase cost

In addition to the cost of purchase at this cost, Shukla and taxes, goods include dual inwards and other expenses which are considered as direct reasons for acquisition. Other items such as business discounts, discounts, etc. are deducted from the cost of purchase. Cost of conversion

Whatever costs are related to direct production units like cost of conversion, such as direct labor. These costs include fixed and variable production operations of systemic allocation, which are spent while converting goods into finished goods. other costs

In these costs, the same expenditure is put in that which is to transport goods from one place to another. Sometimes, the cost of texturing products for specific customers is also put in. Disclosure

Financial details should disclose all this information:

1) Whatever accounting policies have been adopted to measure the list, it is necessary to disclose 2) The list and the total cost of its classification are also required to disclose.

http://en.wikipedia.org/wiki/Inventory_valuation

Maheshwari, S., Maheshwari, S., & Maheshwari, S. (2012). Inventory valuation. In Financial Accounting (Fifth ed.). Noida: Vikas Publishing House Pvt.

Shukla, M. (2009). Final Accounts. In Advanced Accounts. New Delhi: S. Chand &.

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