Financial Accounting

Chapter 11

Inventory – Valuation

LEARNING OBJECTIVES

After studying this chapter, you will be able to:

1. Understand the Meaning of Inventory and Inventory Valuation

2. Recognise the Importance of Inventory Valuation

3. Assess the Technical Features of Inventory Records System

4. Distinguish between Periodic Inventory System and Perpetual Inventory System

5. Understand the Concepts – Cost of Purchase, Costs of Conversion and Other Costs as per Accounting Standard (AS)–2 (Revised)

6. Apply Cost Formula

7. Understand the Specific Identification Costs Method

8. Understand the Meaning and Features of First-In-First-Out (FIFO) Method

9. Prepare Stock Ledger Under FIFO Method and to Compute Costs of Goods Sold Under Both Systems (Periodic System and Perpetual System)