Methods of Valuation of Inventories Homework Help

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Valuation of an inventory is the process in which certain monetary values are assigned to the items in the inventory. This helps in drawing the financial statement and also guides a company in making proper business decisions. If the company chooses not to evaluate its inventory resources, then there can be problems arising due to mismatch between revenues and expenses, leading the company to eventually go out of business. To help you understand these accounting concepts in minimal time and at minimal expenses, offers a pragmatic solution to do your coursework on your behalf as you pick Methods of Valuation of Inventories Assignment Help, the best programme so far for students like you.

What does Methods of Valuation of Inventories entail?
Three important ways to conduct a proper valuation of inventories are:

  • FIFO – First in, First out is the approach where the inventory is valued at the current cost of replacement. During inflation, application of this technique gives the lowest estimate of the cost of goods sold compared to those obtained in case of the other two techniques.
  • LIFO – Last in, First out is where the inventory valuation takes place keeping in mind the cost of materials bought earlier in the year. During inflation, this approach will get you the highest estimate of the cost of goods sold compared to the other two.
  • Weighted Average – This approach takes into consideration the average cost of all goods and also of inventory. However, when the inventory turns on, the values you will be getting using this method will be strikingly similar to those obtained using FIFO method.

Enterprises generally go for LIFO method for the tax relief they enjoy during the inflationary periods.

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