Graded Discussion Board 02View more random threads:
- fin630 assignment no 1 solution april 2011
- MGT613 Production and Operations Management Assignment 1...
- MGMT611 assignment no 2 fall 2010
- MTH301 Calculas II Assignment no 2 November 2011
- Customer Relationship Management (Mkt610) assignment no 1...
- MGT411 Money & Banking Assignment No.1 Solution Spring...
- ISL201 VU Assignment No. 1 Spring April 20
- Entrepreneurship Assignment No. 01Spring 2011 idea solution
- Business Communication ENG301 fall 2010 second assignment...
- MTH501 Linear Algebra Assignment No 4 Spring 24 June 2012
Financial Accounting II (MGT401)
Topic: Valuation of Inventory
XYZ Ltd. is a manufacturer of readymade garments. Company’s accounts officer has suggested the management to change its accounting policy relating to inventory valuation method from weighted-average cost method (WAC) to first-in first-out (FIFO). It was considered that FIFO method reflects the usage of inventory more accurately in response of economic cycle.
Accounts officer has determined following differences, if company changes its inventory valuation method from weightage average method to first-in, first-out method.
Weighted Average Method (Rs.)
First-in, First-out (Rs.)
Inventory at 1st January 2013
25,000
22,000
Inventory at 31st December 2013
36.000
30,000
Inventory at 31st December 2014
48,000
50,000
Inventory at 31st December 2015
64,000
70,000
Requirement:
a) On the basis of given data, you are required to mention that what will be the effect of change in inventory valuation method by filling the table given below.
Year
Particulars
Effect on Cost of Goods Sold
(simply mention that whether it will increase or decrease)
Effect on Profit
(simply mention that whether it will increase or decrease)
2013
Change in Opening Inventory
2013
Change in Closing Inventory
2014
Change in Closing Inventory
2015
Change in Closing Inventory
Sponsored Links
There are currently 1 users browsing this thread. (0 members and 1 guests)