How the stock valuation is made under the following methods-01783
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vu mcm301 Communication skills.
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vu mcm301 Mid Term Solved Past Paper No. 1.
Question 1: How the stock valuation is made under the following methods?
Residual Value Rs. 40,000
Expected Life 5 years
Answer:
- FIFO
- LIFO
Under FIFO we assumed that stock purchased first is used out first so the closing stock consist of stock purchased last the rate shows approximately the latest of last purchases price.
Cost of the assetResidual Value Rs. 40,000
Expected Life 5 years
Under LIFO bases : stock purchase last is used first so the items present in the stock are the item old once and thus it represent older prices , lifo is not used in industry now and accounting standards prohibit using them.
