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Inventory valuation


Darbas anglų kalba. Inventoriaus vertinimas. Introduction. Nature of inventory. Classes of inventory. Inventory valuation methods. FIFO method. Weighted average method. LIFO method. Evaluation of LIFO as a cost allocation method. Major advantages of LIFO. Major disadvantages of LIFO. Specific identification method. FIFO. Weighted average. LIFO. Specific identification. Comparing inventory cost methods. Examples. Characteristics of each method. Other cost methods. Cost of latest purchases. Standard costs. Direct costing. The retail method. Conclusion.


The term inventory designates goods held for sale in the normal course of business and, in the case of manufacturer, goods in production or to be placed in production. The nature of goods classified as inventory varies widely with the nature of business activities, and in some cases includes assets not normally thought of as inventory. For example, land and buildings held for resale by a real estate firm, partially completed buildings to be sold in the future by a construction firm, and marketable securities held for resale by a stockbroker are all properly classified as inventory by the respective firms.
Inventory represents one of the most active elements in business operations, being continuously acquired or produced and resold. A large part of a company’s resources is frequently invested in goods purchased or manufactured. The cost of these goods must be recorded, grouped and summarized during the accounting period. At the end of the period, costs must be allocated between current and future activities, i.e., between goods sold during the current period and inventory, i.e., those goods on hand to be sold in future periods.
If inventory costs remained constant, this allocation would prove to be rather simple. But when inflationary and deflationary pressures cause changes in inventory costs, a more normal condition, the allocation of historical cost to revenues of the current and future periods challenges the most experienced accountant. Failure to allocate costs properly can result in serious distortion of financial position and operating performance.
Classes of inventory
The term inventory or merchandise inventory is generally applied to goods held by a merchandising firm, either wholesale or retail, when such goods have been acquired in condition of resale. The terms raw materials, goods in process, and finished goods refer to the inventories of a manufacturing enterprise.
Raw materials are goods acquired for use in the production process. Some raw materials are obtained directly from natural sources. More often, however, raw materials are acquired from other companies and represent the finished products of the suppliers. For example, newsprint is the finished product of the paper mill but represents raw material to the printer who acquires it.
Goods in process, alternately referred to as work in process, consist of materials partly processed and requiring further work before they can be sold. This inventory includes three cost elements: (1) direct materials, (2) direct labor, and (3) factory overhead or manufacturing overhead.
Finished goods are the manufactured products awaiting sale. As products are completed, the costs accumulated in the production process are transferred from Goods in Process to the finished goods inventory account. ...

Rašto darbo duomenys
DalykasApskaitos kursinis darbas
TipasKursiniai darbai
Apimtis18 puslapių 
Literatūros šaltiniai3
KalbaAnglų kalba
Dydis82.54 KB
Viso autoriaus darbų3 darbai
Metai2007 m
Mokytojas/DėstytojasViktoras Filipavičius
Švietimo institucijaVilniaus Gedimino Technikos Universitetas
FakultetasVerslo vadybos fakultetas
Failo pavadinimasMicrosoft Word Inventory valuation [speros.lt].doc




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  • Kursiniai darbai
  • 18 puslapių 
  • Vilniaus Gedimino Technikos Universitetas / 4 Klasė/kursas
  • Viktoras Filipavičius
  • 2007 m
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