Valuation of stock

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    Stock taking: checking whether the stock shown on paper rally exists or not.

    Store keeper : one who records things coming in or going out of the stock of a business .

     

    METHODS FOR VALUATION OF STOCK

    FIFO

    Things that come to us first  must be issued first.  This method is used for perishable items or for things which expire e.g medicines.

    LIFO

    Last in first out

    This method is used for where in which technological advancements are expected. E.f you have p1, p3 stock of computers you would want to get p3 out first before its market price falls too by the introduction of a newer version of computer.

    AVCO

    Average cost method

    Under this method you recalculate the average cost  after every receipt of a batch of new stock and then use it as the cost of the next batch sold.This method is used for durable items in which no technological advancements are expected for example furniture,etc

     

    NOTE : for all these methods, closing stock is the same except for FIFO. Closing stock for FIFO is usually higher.