The valuation method of inventory management

First) FIFO method
(1) The FIFO method is first issued in the first purchase of the inventory, thereby determining the cost of issuing inventory and ending inventory.
(2) The results of the FIFO method based on the field inventory system are the same as the perpetual inventory system.
(3) under the FIFO method, the inventory cost is determined by the recent purchase, and the final inventory cost is close to the prevailing market price.
(4) When prices rise, the FIFO method will overestimate the value of the enterprise's current profit and inventory stock; Conversely, when prices fall, the value of the company's inventory and the current profit will be underestimated.
(5) The advantage of FIFO method is that enterprises can not randomly select inventory valuation to adjust the current profit; The disadvantage is that the workload is relatively large.
(ii) The LIFO method
(1) The LIFO method is issued on the basis of a later purchase, which determines the cost of issuing inventory and ending inventory.
(2) The results of the LIFO method based on the field inventory system are different from the perpetual inventory system.
(3) The advantage of the LIFO method is that in the period of rising prices, the issue of inventory in accordance with the recent receipt of the unit cost calculation, so that the current cost increases, lower profits, can reduce the adverse impact of inflation on enterprises, which is also the practice of the principle of prudent accounting methods; The disadvantage is that the calculation is cumbersome.
(iii) Individual valuation method
Individual valuation method, also known as individual identification law, specific identification method, the actual batch of methods. The use of this method is to assume that the physical flow of inventory and the cost of the flow of the same, according to a variety of inventory, each to identify the wholesale out of inventory and the final inventory of the purchase of the batch, respectively, according to their purchase or production of the unit cost as determined in the calculation of the wholesale out of inventory and final inventory method.
(iv) Weighted average method
The weighted average method, also known as the All-month weighted average method, refers to the total volume of goods received this month as a weight, to remove the total cost of receipt of this month plus the first month inventory cost, calculate the stock of the weighted average unit cost, so as to determine the issue of inventory and inventory costs.
(v) Moving average method
The moving average method, also known as the moving weighted average method, refers to the cost of this receipt plus the cost of the original inventory, divided by the amount of this receipt plus the original receipt quantity, according to the calculation of the weighted unit price, and the issue of inventory valuation of a method.
(vi) Planned Cost method
The plan cost method means that the income, issuance and balance of the enterprise's inventory are denominated at a predetermined planned cost, with a "Material cost difference" account, and the difference between the actual cost and the planned cost is registered.

The valuation method of inventory management