TASK ANALYSIS FOR CALCULATING CLOSING STOCK LAST IN FIRST OUT

METHOD (LIFO)
The following flow chart depicts the steps taken for a step by step analysis for calculating the

value of closing stock LIFO method.

• Record opening balances ( units and cost)

step 1

• Record any receipts ( units and cost)

step 2 • Add to previous balance ( units and costs)

• Record any issues by using the latest stock

step 3 • Recalculate ending balances

• Continue to record any receipts by adding to previous balances

step 4

• Continue to issue stock from latest stock received.

step 5 • Record remaining balances ( unit and cost)

• At end of transactions to calculate closing stock mutliply ending unit by cost of

step 6 stock remaning.

As can be seen from the flow chat above in order to calculate closing stock from the

stock cards on a perpetual basis, it involves various tasks. For this lesson five the Practical

application of Stock Valuation using LIFO- the various tasks are needed in order to achieve the

value for closing stock. Once each task is followed the accountant / student will be able to

effectively attain the value of closing stock. More specifically using the LIFO method , the latest

stock is issued first and then recalculations need to done. It is to be noted that this task assumes
that Step 2 , this business received stock and then for step 3 , the business issued stock. These

steps can be interchanged depending on the transactions occurring within a business. What is

important is that for issues it is from the latest stock and then STEP 6 multiplying unit by cost to

determine the value.