Chapter 9 inventory stock valuation
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Chapter 9 Inventory (stock) valuation . Inventory (stock) valuation . A good estimate of closing stock is provided by three methods of stock valuation: First-In-First-Out (FIFO) Method Last-In-First-Out (LIFO) Method Average Cost (AVCO) Method . First-In-First-Out (FIFO) Method.

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Chapter 9 Inventory (stock) valuation

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Chapter 9 inventory stock valuation

Chapter 9Inventory (stock) valuation


Inventory stock valuation

Inventory (stock) valuation

A good estimate of closing stock is provided by three methods of stock valuation:

  • First-In-First-Out (FIFO) Method

  • Last-In-First-Out (LIFO) Method

  • Average Cost (AVCO) Method


First in first out fifo method

First-In-First-Out (FIFO) Method

In this method we assume that the first set of inventory received is the first to leave the warehouse. The resulting ending inventory will be valued at current prices.


First in first out fifo method1

First-In-First-Out (FIFO) Method

Stock valuation schedule (FIFO)

January 1, 2006 - June 30, 2006


Last in first out lifo method

Last-In-First-Out (LIFO) Method

In this method we assume that the last set of inventory received is the first to leave the warehouse. The resulting ending inventory will be valued at older prices.


Last in first out lifo method1

Last-In-First-Out (LIFO) Method

Stock valuation schedule (LIFO)

January 1, 2006 - June 30, 2006


Average cost avco method

Average Cost (AVCO) Method

In this method, each time goods are purchased we calculate a new average cost of inventory. The average cost is calculated using the equation

Average cost of inventory=

Total value of goods on hand ÷ Quantity of goods on hand

The resulting ending inventory will be valued at the last calculated average.


Average cost avco method1

Average cost (AVCO) Method

Stock valuation schedule (AVCO)

January 1, 2006 - June 30, 2006


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