Inventory valuation and methods
What Is Inventory Valuation? Inventory valuation is a process in accounting that businesses use to determine the value of unsold inventory stock when they are producing their financial accounts. For an organization, inventory stock is an asset that must have a monetary value in order to be recorded on the balance sheet. Your inventory turnover ratio can be calculated using this value, which can help you plan your purchasing decisions. As an illustration, suppose you own a shoe store and at the end of the year you still have 50 pairs of shoes. You must determine their financial worth and record it on your balance sheet. Let's examine the method and rationale behind your value calculation. Costs Included in Inventory Valuation Inventory is present at the end of an accounting period in both a finished and unfinished state. What do you think that investment is worth? You need pieces to assemble a bicycle. However, you also need someone to assemble the pieces, and you have a number of...