AS 2: Valuation Of Inventories

Nitesh Kamath PGP/FW/10-12 Roll No. 3

. is issued by the Council of the Institute of Chartered Accountants of India.AS 2: Valuation Of Inventories   Accounting Standard (AS) 2. ‘Valuation of Inventories’. 1981. Accounting Standard (AS) 2. ‘Valuation of Inventories’ was issued in June.

. What Is Valuation Of Inventories? And What is the need for it? Ans: It is determining the monetary amount or value of Inventory at any given point of time. The need for Valuation of Inventories is to access the Present Financial Conditions and to anticipate Future Condition of the organization.

subtractions or deletions) are recorded for each transaction as or immediately after it occurs. The physical quantity and value of goods in  The inventory is counted or measured at fixed time intervals (usually at the end of an accounting period) to determine stock status.Inventory Records Perpetual Record  Periodic Record   All Changes to stock (additions. The physical quantity and the value of goods in inventory are available at the end of .

Methods For Valuation Of Inventories .

Moving Average: It computes an average unit cost after each purchase.Average Cost  Simple Average: For calculating simple average we have to divide the sum of unit costs by the number of orders or events  Weighted Average: For calculating weighted average we have to divide the cost of goods available by the total number of units available during the period.  .

Specific Cost  Specific Cost procedure consists of tagging or numbering each item as it is placed to inventory so its exact cost is readily visible. .

The cost of inventory valued using different methods will be different. The best method depends on the nature and objectives of the organization. .Conclusion     There is no standard recommended practice for inventory costing. It is because of the difference in assumptions and approach to the problem. The method chosen should be practical. reliable and as easy to apply as possible.

0/:70.438898419.489 $50..0/943.902.4898 70.9.1./.0394784980.1..3473:2-073 0.$50.8-0 .489574.8985..

9.:0/:83/11070392094/8 -0/1107039 98-0.42203/0/57.01473.55..85488-0 %0. 70.:804190/110703.5574.9...03947.0841 9047.3/.3/..480384:/-057.:843 %07083489..7/70.3.9:70..3/4-0.894.88:259438 .9490574-02 .9.03.3/.489413.943 %02094/.-0.03947 .43.8 0.4893 %0-0892094//0503/843903.