2. What Is Inventory?
Inventory is the term for the goods available
for sale and raw materials used to produce
goods available for sale. Inventory represents
one of the most important assets of a
business.
3. B)the quantity of goods or materials on hand for Sales
/Production : STOCK
A) an itemized list of current assets: such as
(1): a list of goods on hand
(2): a catalog of the property
4. Closing Stock
Closing stock is the amount of inventory that a
business still has on hand at the end of a
reporting period.
5. Type of Inventory
There are three common methods for inventory accountability:
1. average cost method /Weighted- average cost method.
2. first in, first out (FIFO), and
3. last in, first out (LIFO)
generally accepted accounting principles (GAAP) which allows for all three
methods to be used.
6. Example
Inventory QTY Rate Total Cost
1 –January 100 Units @5 per Units Tk. 500
10-Jan 200 Units @6 per Units Tk 1200
20-Jan 300 Units @7 per Units Tk.2100
Total Purchase 600 Units @6.3333 Tk. 3800
Sales/ Use 300 Cost ?
Stock 300 Units Taka ?
7. Calculation of FIFO, LIFO, Average
Particulars @5 per
Units
@6 per
Units
@7 per
Units
@6.33
(3800/600)
Total
FIFO:
COGS 100 200 Taka 1700
Inventory/Closing Stock 300 TK. 2100
LIFO
COGS 300 TK 2100
Inventory 100 200 Tk.1700
Average 6.33 Tk.1899.99
8. The effects of accounting standards
1. If The Inventory is higher then Cost of The Company will
be higher.
