Archive about 'Stock Valuation'

How to adjust the books of account when Physical Stocktaking is not precisely on the Accounting Date

Tweet The dual purpose of a physical stock take is to ensure:- the physical existence and the value of the stocks owned by the firm at the Balance Sheet Date. Note that stocks or inventories comprise raw material, work-in-progress or completed product. Any discrepancies between the book stocks and physical count must be investigated and […]

Inventory Control by using the technique of ABC analysis.

Tweet ABC analysis is a technique commonly used in stock control or management. This technique allows us to exercise varying degree of control over different items of stock based on the investment involved and the value. Features of ABC analysis include the following: Divided normally into three(3) categories according to their importance in term of […]

Explain the difference between Bin Card and Store Ledger

Tweet A bin card: Is kept for each and every stock item by the storekeeper A quantitative record of the individual stock item of its receipt, issue and balance Kept attached to the bins or receptacles or quite near so as to enable to identify the stock Balance is taken out after transaction whether every […]

Simple Illustration On How to Value Stock/Inventories based on the lower of cost and net realizable value (Part 2)

Tweet In earlier Part 1, we understand the meaning of net realizable value (NRV) and the principal situations how NRV occurs. The basic valuation rule for stock or inventories are to value stock based on the lower of cost AND net realizable value(NRV). Therefore at a periodic time¬† the company needs to takes its stock […]

Inventories should be measured at the lower of cost and net realizable value .Explain the term Net Realizable Value. What are the principal situations in which Net Realizable Value(NRV) is likely to be less than cost? (Part 1)

Tweet Generally, an asset should not be carried at amounts greater than those expected to be realized from their sale or use. In the case of inventories: Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the […]

Financial Accounting Quiz on Inventories or Stock

Tweet Refresh or test your accounting knowledge on Inventories or stocks: Multiple Choice Questions ( with answers(below)) 1. The lower of cost or market method for valuing inventories a. Recognizes reductions in the values of inventories held by a corporation in the period in which the decline in value occurs b. Recognizes increases in the […]

Explain What Are Stock Reorder Level, Maximum, Minimum and Safety or Buffer Stock Level, Their Purpose And Formula.

Tweet Question: Explain what is stock reorder level, what is it for and the formula to compute this stock reorder level. Also explain what is Maximum, Minimum and Safety Stock level Suggested Answer: Stock Reorder Level, Purpose & Formula: Stock reorder level indicates to the stock controller when it is necessary to reorder certain raw […]

When To Adopt A Periodic Inventory System Or A Perpetual Inventory System?

Tweet I wish to know which Inventory system to adopt. My main problem is that my company is not able to record Cost of goods sold at the same time that the sale is recorded. Please advise? One of the main criteria affecting the choice of an inventory system is that where at the time […]

List Of Topics Under Heading: Stock Valuation

Tweet Click to the respective topic on Stock Valuation Content Page On STOCK VALUATION 1.0 First In First Out (FIFO) Method of Stock Valuation 2.0 Last In First Out(LIFO) Method Of Stock Valuation 3.0 Weighted Average Method Of Stock Valuation 4.0 Selection Of The Best Stock Valuation Method 5.0 ¬† QUESTION: Accounting Test Question No […]

Accounting Test Question SV No.1 on Stock Valuation Methodologies

Tweet Accounting Test Question SV No.1: Company XYZ uses a perpetual inventory system. Append below the following transaction relating to its merchandise inventory during the month of Nov’06 Date Transaction Nov 1 Inventory on hand – 3,000 units @ $8 each Nov 1 Inventory on hand – 3,000 units @ $8 each Nov 7 Bought […]