Inventory is:

1)Held in the ordinary course of

business.

2)In the form of materials or

supplies to consumed in the
production process or in the
rendering of services.
A monetary value .
Largest current asset.
COST NET REALIZABLE VALUE

WHICHEVER IS LESS

VALUATION OF
INVENTORY
 WORK IN PROGRESS(WIP)
Arising under construction contract.
Arising in the ordinary corse of
business.
Financial Instruments held in stock-in-
trade.
Inventories of livestock & Forest
products.
Inventories are valued at lowered
value and net realisable value.
Cost of inventories should comprise
of all cost of purchase, , cost of
conversion and loading and
unloading charges, carriage &
freight inward.
PERIODICINVENTORY SYSTEM
PERPETUAL INVENTORY
SYSTEM
 VERIFICATION
 INFORMATION
 FIGURE
 COST FACTOR
 INVENTORY CONTROL
 BUSINESS ACTIVITES
 INVENTORY INCLUDE
FIRST IN FIRST
OUT(FIFO).
LAST IN FIRST
OUT(LIFO).
WEIGHTED AVERAGE

METHOD.
Purchased or produced first are
consumed first
Ending inventory includes last
goods purchased.
Value of Closing Stock =120*40
=Rs4,800.
 Quite close to  Calculation
present value. Complicated.
 Perishable Goods.  Value Of stock Not
 No Unrealised Be Recent.
Profits.  Price Rising.
 Useful when.  Production Of
 Slow Moving. Identical jobs.
 Issues are made out of
earliest lot o n hand.
Closing Stock is Valued on
Earlier consignments.
Value of Closing Stock =20*50+100*40
=Rs. 1140
 Simple to Operate.  Clerical Errors.
 Recovers Cost Of  Comparison between
Production. the one job and other
 Production at recent job is difficult.
Price.  More Than One Price.
 Reduces Profits And  Does not reflect the
Less burden on Tax. current market price.
Weighted Total cost of goods
available for sale
Average = during the period
price per unit
Total number of
units available for
sale during the
period.
Weighted avg
Price per unit=400+500+800 = 4.25
400
The closing stock will be 120*4.25=Rs 510
 The cost of the purchased or
manufactured inventory has to be
determined and
 Such cost is retained in the inventory
accounts of the company until the
product is sold .
Schedule V1 .
Polices adopted.
Classification of inventories.