Archive | Inventory

Lower of Cost or Market (LCM) Rule (With Criticism)

In this article we will discuss about Lower of Cost or Market (LCM) Rule:- 1. Subject Matter of Lower of Cost or Market (LCM) Rule 2. Arguments in Support of LCM Rule 3. Criticism. Subject Matter of Lower of Cost or Market (LCM) Rule: The different methods of inventory costing such as FIFO, LIFO determine […]

Inventory: Meaning, Need and Objectives

In this article we will discuss about Inventory:- 1. Meaning of Inventory 2. Need for Inventories 3. Objectives for Measurement 4. Methods of Costing 5. Consistency in the Valuation 6. Accounting 7. Consequences of the Choice of Inventory Methods. Contents: Meaning of Inventory Need for Inventories Objectives for Measurement of Inventories Methods of Inventory Costing […]

As-2 on Inventory Valuation

AS-2 has advocated to value inventories at the lower of historical cost and net realisable value. It comments: “Inventories are held in the expectation of deriving revenue directly or indirectly from their sale or use. In order to determine the results of a business for a given period, it is necessary to carry forward the […]

Methods of Inventory Pricing

The following points highlight the generally accepted methods of inventory pricing, each based on a different Assumption of cost flow. 1. Cost Price Methods: (i) First-In, First-Out (FIFO): The FIFO method follows the principle that materials received first are issued first. After the first lot or batch of materials purchased is exhausted, the next lot […]

Inventory Management: Meaning, Objective and Techniques

After reading this article you will learn about Inventory Management:- 1. Meaning of Inventory Management 2. Objectives of Inventory Management 3. Techniques 4. Inventory Valuation. Meaning of Inventory Management: ‘Inventory refers to the stockpile of the product a firm is offering for sale and the components that make up the product.’ In short, inventory is […]

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