Chapter 8

Valuation of Inventory

There are the following types of inventories:


Inventory is valued at “lower” of:

  1. Cost that is purchase cost or
  2. Market price that is net realizable value

Though there are many methods of valuation of inventory by a company, the most important ones that are used practically are as follows:


Let us understand these methods while differentiating between the two.


The FIFO method is more acceptable and more widely used ...

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