Inventory Valuation

Inventory Valuation is the process of assigning of monetary value on inventory whether of raw materials, work in progress or finished nature through a physical counting activity referred to as stock taking.

Inventory Valuation applies where International Accounting Standards (IAS no-2) advocates valuation of inventory.

Inventory Valuation is necessary for this element of accounting determines on the computation of net profit of the organization at the end of the financial period.

Information on Inventory Valuation is used in the direct computation of net profit/loss of the business whereby purchases is summed up to the opening inventory and closing inventory is subtracted to determine the net profit or (loss)

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About the Author - Dr Geoffrey Mbuva(PhD-Finance) is a lecturer of Finance and Accountancy at Kenyatta University, Kenya. He is an enthusiast of teaching and making accounting & research tutorials for his readers.