Question

1)    What is the purpose of inventory valuation methods?

2)    What are the four inventory valuation methods a company can use?

3)    What inventory method is best used with many items with similar costs?

4)    What inventory method will provide the highest net income when prices are rising?

4)    What inventory method could help a company reduce its corporate income taxes?

5)   What is inventory turnover and how is it measured?

Answer 1

answers

1.the purpose of inventory valuation methods is to evaluate the value of inventory on the date of valuation ( i.e the value of inventory in the hand )generally the inventory is valued at he year end .some cases on quarterly basis or monthly basis depends up on the organisation

2 four inventory value method than company can adopt that is

a) FIFO (first in first out put)

b) LIFO (last in first out put)

c) WEIGHTED AVERAGE

d) specific identification

3 specific identification that is on cost of goods sold is  inventory method is best used with many items with similar costs

4 fifo inventory method will provide the highest net income when prices are rising

5.lifo inventory method could help a company reduce its corporate income taxes.

6.invenyory turn over is the ratio showing how many times the company as sold and replaced inventory in a period of time.

it is measured - cost of goods sold/average inventory