ALIFF AIZAT

ACCOUNTING FOR INVENTORY INVENTORY : Assets owned by the business for the purposes of selling to the customer. Tangible properties : Held for sale in the ordinary course of business In the process of production for sale In the form of materials or supplies to be consumed in production process to be available for sale

INVENTORY SYSTEM

PERIODIC

PERPETUAL

UPDATED ON A PERIODIC BASIS

UPDATES INVENTORY CONTINUOUSLY AFTER EACH PURCHASE OR SALE

i) monthly ii) quartely iii) at the end accounting period

A person who is "right-brained" is said to be more intuitive, thoughtful, and subjective.

No records on hand throughout the period

Detail record are kept both inventory purchase & sale

physical stock count at the end of acc period the determination of COGS

The COGS is determined when purchases and sales occur

no record kept on oth quantities and cost

Keeps track on both quantities and cost

done manually by doing physical stock

A computerise accounting system

best suited for business selling high-volume

Best suited for small business and businesses selling high-price

ALIFF AIZAT

BASIS OF INVENTORY VALUATION

The inventory should be valued at either costprice or Net Realisable Value (NRV) whichever is the LOWEST METHODS OF INVENTORY VALUATION

FIFO

LIFO

FIRST IN FIRST OUT

LAST IN FIRST OUT

Inventory is sold according to the sequance it is acquired, starting to the first purchase to the last purchase

The inventory that is bought last will be the first to be sold, followed by other inventories according to the sequance of purchase

AVCO AVERAGE COST

Inventory will be valued at the average cost and not based on inventory purchase price