Stock Valuation Example

The following simple illustration will help in explaining various methods of stock valuation. Consider the following (simplified) transactions for the example.

No.	Date	Transaction	Qty	Cost	Value
1	03-Apr	Purchase of Material	100	350	35000
2	07-Apr	Purchase of Material	100	450	45000
3	10-Apr	Issue	(75)	?	?
4	15-Apr	Purchase of Material	150	410	41000
5	20-Apr	Issue	(50)	?	?

		Closing Stock	220	?	?

In the table above, cells marked with question mark (?) are to be calculated. The stock valuation is required to find the values. There are various methods in which the stock on hand (225) and issue (75+50) are costed and valuated. Depending on the need you can adopt the required method. Perpetual Weighted Average The following table shows the calculation of the Cost of issues and Cost of Stock in the perpetual weighted average method.

No.	Particulars	Quantity	Avg.Cost	Value
1	Purchase of material at 350	100	350	35000
2	Purchase of material (100) at 450. We already have a stock of 100 at 350.( 100 x 350 ) + (100x 450 )/200= 80000/200 = 400	100	450	45000
		200	400	80000
3	Issue of 75 material at the current average rate 75 x 400 = 30000 Issue is valued at 30000 at a cost of 400.	75	400	30000
		125	400	50000
4	Purchase of material 150 at 410.(125x400) + (150x410) / 275= 111500/275 = 405.4545	150	410	61500
		275	405.4545	111500
5	Issue of 50 material at the current Average price50 x 405.4545= 20272.725	50	405.4545	20272.725
		225	405.4545	91227.2625

First-In-First Out (FIFO) The following table shows the calculation of the Cost of issues and Cost of Stock in the FIFO method.

No.	Particulars	Quantity	Cost	Value
1	Purchase of material at 350	100	350	35000
2	Purchase of material (100) at 450.	100	450	45000
		100	350	35000
		100	450	45000
3	Issue of 75 material. In FIFO, the first arrival will be considered for issue.Issue will be made from the first lot of 100 at 350.75 x 350 = 26250.	75	350	26250
		25	350	8750
		100	450	45000
4	Purchase of material 150 at 410.	150	410	61500
		25	350	8750
		100	450	45000
		150	410	61500
5	Issue of 50 materials. As per FIFO, 25 material issued from balance first lot and 25 from second lot.(25 x 350) + (25 x 450)= 20000	50	25 x 350 25 x 450	8750 11250
		75	450	33750
		150	410	61500

Last-In-First Out (LIFO) The following table shows the calculation of the Cost of issues and Cost of Stock in the LIFO method. The Calculations are done on the basis of monthly period. In LIFO, all the arrival transactions are processed first to find out the order of issue.

No.	Particulars	Quantity	Cost	Value
1	Purchase of material at 350	100	350	35000
2	Purchase of material (100) at 450.	100	450	45000
3	Purchase of material 150 at 410.	150	410	61500
4	Issue of 75 material. In LIFO the last arrival will be considered for issue.Issue will be made from the last lot of 150 at 410.75 x 410 = 30750.	75	410	30750
		100	350	35000
		100	450	45000
		75	410	30750
5	Issue of 50 materials. As per LIFO, it issued from balance lst lot50 x 410 = 20500	50	410	20500
		100	350	35000
		100	450	45000
		25	410	10250

Weighted Average The following table shows the calculation of the Cost of issues and Cost of Stock in the weighted average method. The weighted average cost is calculated on a periodical basis and generally done on a monthly basis. In this method the average cost of the item is calculated and that value is used for all the valuation purposes during the period. In Weighted average, all the arrival transactions are processed first to find out the weighted average cost of the item.

No.	Particulars	Quantity	Cost	Value
1	Purchase of 100 material at 350	100	350	35000.00
2	Purchase of material (100) at 450.	100	450	45000.00
3	Purchase of material 150 at 410.	150	410	61500.00
4	Issue of 75 material at the Weighted average rate75 x 404.2857 = 30321.4275	75	404.2857	30321.43
5	Issue of 50 material at the Weighted Average price50 x 404.2857= 20214.285	50	404.2857	20214.29

Total Inward Quantity = 100 +100 + 150 = 350 Total Inward Value = 35000+ 45000+61500 = 141500 Wt. Avg.Cost = 141500/350 = 404.2857 Total Issue Value = 30321.43 + 20214.29 = 50535.72 Stock Value = 141500 - 50535.72 = 90964.28 Closing Stock = 350- 75 - 50 = 225 Closing Stock Value = 225 x 404.2857 = 90964.28 The illustration clearly indicates the various methods of stock valuation and how it affects the value of issue and stock. The following table summarizes the calculation for comparative study purpose. The Closing Stock-on-Hand is 225 and purchase value is 141500.

Method	Issue Value	Stock Value
Moving Weighted average	50272.725	91227.2625
FIFO	46250	95250
LIFO	51250	90250
Weighted Average	50535.7125	90964.2825

As mentioned above, GoodBooks provides options to valuate the stock in any of the methods. You can select different method of valuation for different items, if so required Please refer to item master to specify which type of valuation you want to adopt for a particular item. Running the actual valuation process is very simple and is as shown in Stock Valuation Process.

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Revision Differences

--- May 18, 2014 @ 05:10:05 [Autosave]
+++ Current Revision
 Unchanged: The following simple illustration will help in explaining various methods of stock valuation.
 Unchanged: Consider the following (simplified) transactions for the example.
 Unchanged: <table width="688" border="1" cellspacing="0" cellpadding="0">
 Unchanged: <tbody>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43"><strong> No.</strong></td>
 Unchanged: <td valign="top" width="75"><strong> Date</strong></td>
 Unchanged: <td valign="top" width="123">< strong>Transaction< /strong></td>
 Unchanged: <td valign="top" width="85"><strong> Qty</strong></td>
 Unchanged: <td valign="top" width="100">< strong>Cost</ strong></td>
 Unchanged: <td valign="top" width="163">< strong>Value< /strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43">1</td>
 Unchanged: <td valign="top" width="75">03-Apr</td>
 Unchanged: <td valign="top" width="123">Purchase of Material</td>
 Unchanged: <td valign="top" width="85">   100</td>
 Unchanged: <td valign="top" width="100">      350</td>
 Unchanged: <td valign="top" width="163">       35000</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43">2</td>
 Unchanged: <td valign="top" width="75">07-Apr</td>
 Unchanged: <td valign="top" width="123">Purchase of Material</td>
 Unchanged: <td valign="top" width="85">   100</td>
 Unchanged: <td valign="top" width="100">      450</td>
 Unchanged: <td valign="top" width="163">       45000</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43">3</td>
 Unchanged: <td valign="top" width="75">10-Apr</td>
 Unchanged: <td valign="top" width="123">Issue</td>
 Unchanged: <td valign="top" width="85">    (75)</td>
 Unchanged: <td valign="top" width="100">        ?</td>
 Unchanged: <td valign="top" width="163">             ?</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43">4</td>
 Unchanged: <td valign="top" width="75">15-Apr</td>
 Unchanged: <td valign="top" width="123">Purchase of Material</td>
 Unchanged: <td valign="top" width="85">   150</td>
 Unchanged: <td valign="top" width="100">      410</td>
 Unchanged: <td valign="top" width="163">       41000</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43">5</td>
 Unchanged: <td valign="top" width="75"> 20-Apr</td>
 Unchanged: <td valign="top" width="123">Issue</td>
 Unchanged: <td valign="top" width="85"><strong>    </strong>(50)</td>
 Unchanged: <td valign="top" width="100">< strong>        </strong>?</td>
 Unchanged: <td valign="top" width="163">< strong>             </strong>?</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43"></td>
 Unchanged: <td valign="top" width="75"></td>
 Unchanged: <td valign="top" width="123">< strong> </strong></td>
 Unchanged: <td valign="top" width="85"><strong>  </strong></td>
 Unchanged: <td valign="top" width="100">< strong> </strong></td>
 Unchanged: <td valign="top" width="163">< strong> </strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43"></td>
 Unchanged: <td valign="top" width="75"></td>
 Unchanged: <td valign="top" width="123">< strong>Closing Stock</strong></td>
 Unchanged: <td valign="top" width="85"><strong>  220</strong></td>
 Unchanged: <td valign="top" width="100">< strong>        ?</strong></td>
 Unchanged: <td valign="top" width="163">< strong>             ?</strong></td>
 Unchanged: </tr>
 Unchanged: </tbody>
 Unchanged: </table>
 Unchanged: In the table above, cells marked with question mark (?) are to be calculated.  The stock valuation is required to find the values.   There are various methods in which the stock on hand (225) and issue (75+50) are costed and valuated.  Depending on the need you can adopt the required method.
 Unchanged: <strong>
 Unchanged: </strong>
 Unchanged: <strong>Perpetual Weighted Average</strong>
 Unchanged: The following table shows the calculation of the Cost of issues and Cost of Stock in the perpetual weighted average method.
 Unchanged: <table border="1" cellspacing="0" cellpadding="0">
 Unchanged: <tbody>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"><strong> No.</strong></td>
 Unchanged: <td valign="top" width="245">< strong>Particulars< /strong></td>
 Unchanged: <td valign="top" width="95"><strong> Quantity</strong></td>
 Unchanged: <td valign="top" width="80"><strong> Avg.Cost</strong></td>
 Unchanged: <td valign="top" width="116">< strong>Value< /strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42">1</td>
 Unchanged: <td valign="top" width="245">Purchase of material at 350</td>
 Unchanged: <td valign="top" width="95">  100</td>
 Unchanged: <td valign="top" width="80">   350</td>
 Unchanged: <td valign="top" width="116">  35000</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42">2</td>
 Unchanged: <td valign="top" width="245">Purchase of material (100) at 450.   We already have a stock of 100 at 350.( 100 x 350  ) + (100x 450 )/200=     80000/200 =   400</td>
-Deleted: <td valign="top" width="95">  100</td>
+Added: <td valign="top" width="95">  100&nbsp;</td>
-Deleted: <td valign="top" width="80">   450&nbsp;</td>
+Added: <td valign="top" width="80">   450&nbsp;
+Added: &nbsp;</td>
-Deleted: <td valign="top" width="116">  45000</td>
+Added: <td valign="top" width="116">  45000&nbsp;</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"></td>
 Unchanged: <td valign="top" width="245"></td>
 Unchanged: <td valign="top" width="95"><strong>     200</strong></td>
 Unchanged: <td valign="top" width="80">      <strong>400</ strong></td>
 Unchanged: <td valign="top" width="116"><strong>   80000</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42">3</td>
 Unchanged: <td valign="top" width="245"> Issue of 75 material at the current average rate 75    x 400  =  30000 Issue is valued at 30000 at a cost of 400.</td>
-Deleted: <td valign="top" width="95">    75</td>
+Added: <td valign="top" width="95">    75&nbsp;</td>
-Deleted: <td valign="top" width="80">    400</td>
+Added: <td valign="top" width="80">    400&nbsp;</td>
-Deleted: <td valign="top" width="116">   30000&nbsp;</td>
+Added: <td valign="top" width="116">   30000&nbsp;
+Added: &nbsp;</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"></td>
 Unchanged: <td valign="top" width="245"></td>
 Unchanged: <td valign="top" width="95">  <strong>125</ strong></td>
 Unchanged: <td valign="top" width="80"><strong>   400</strong></td>
 Unchanged: <td valign="top" width="116"><strong>   50000</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"><strong> 4</strong></td>
 Unchanged: <td valign="top" width="245">Purchase of material 150 at 410.(125x400) + (150x410)  / 275= 111500/275   =  405.4545</td>
 Unchanged: <td valign="top" width="95">   150</td>
-Deleted: <td valign="top" width="80">      410</td>
+Added: <td valign="top" width="80">      410&nbsp;</td>
 Unchanged: <td valign="top" width="116">    61500</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"><strong>  </strong></td>
 Unchanged: <td valign="top" width="245"></td>
 Unchanged: <td valign="top" width="95">   <strong>275</ strong></td>
 Unchanged: <td valign="top" width="80"><strong> 405.4545</strong></td>
 Unchanged: <td valign="top" width="116"><strong>   111500</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42">5</td>
 Unchanged: <td valign="top" width="245">Issue of 50 material at the current Average price50 x 405.4545= 20272.725</td>
-Deleted: <td valign="top" width="95">     50</td>
+Added: <td valign="top" width="95">     50&nbsp;</td>
 Unchanged: <td valign="top" width="80">   405.4545</td>
-Deleted: <td valign="top" width="116">  20272.725</td>
+Added: <td valign="top" width="116">  20272.725&nbsp;</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"></td>
 Unchanged: <td valign="top" width="245"></td>
 Unchanged: <td valign="top" width="95"><strong> 225</strong></td>
 Unchanged: <td valign="top" width="80"><strong>  405.4545</strong></td>
 Unchanged: <td valign="top" width="116">  <strong>91227.2625< /strong></td>
 Unchanged: </tr>
 Unchanged: </tbody>
 Unchanged: </table>
 Unchanged: <strong> </strong>
 Unchanged: <strong><br clear="all" /> </strong>
 Unchanged: <strong>First-In-First Out (FIFO)</strong>
 Unchanged: The following table shows the calculation of the Cost of issues and Cost of Stock in the FIFO method.
 Unchanged: <table border="1" cellspacing="0" cellpadding="0">
 Unchanged: <tbody>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"><strong> No.</strong></td>
 Unchanged: <td valign="top" width="192">< strong>Particulars                          </strong></td>
 Unchanged: <td valign="top" width="115">< strong>Quantity< /strong></td>
 Unchanged: <td valign="top" width="114">< strong>Cost</ strong></td>
 Unchanged: <td valign="top" width="115">< strong>Value< /strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42">1</td>
 Unchanged: <td valign="top" width="192">Purchase of material at 350</td>
 Unchanged: <td valign="top" width="115">   100</td>
 Unchanged: <td valign="top" width="114">   350</td>
 Unchanged: <td valign="top" width="115">   35000</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42">2</td>
 Unchanged: <td valign="top" width="192">Purchase of material (100) at 450.</td>
 Unchanged: <td valign="top" width="115"><strong>   </strong>100<strong>   </strong></td>
 Unchanged: <td valign="top" width="114"><strong>   </strong>450<strong>   </strong></td>
 Unchanged: <td valign="top" width="115">   45000</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"></td>
 Unchanged: <td valign="top" width="192"></td>
 Unchanged: <td valign="top" width="115"><strong>   100</strong></td>
 Unchanged: <td valign="top" width="114">< strong>    350 </strong></td>
 Unchanged: <td valign="top" width="115"><strong>   35000</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"></td>
 Unchanged: <td valign="top" width="192"></td>
 Unchanged: <td valign="top" width="115"><strong>   100</strong></td>
 Unchanged: <td valign="top" width="114">< strong>    450</strong></td>
 Unchanged: <td valign="top" width="115"><strong>   45000</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42">3</td>
 Unchanged: <td valign="top" width="192">Issue of 75 material.  In FIFO, the first arrival will be considered for issue.Issue will be made from the first lot of 100 at 350.75 x 350   =  26250.</td>
-Deleted: <td valign="top" width="115">     75<strong>      </strong>
+Added: <td valign="top" width="115">     75&nbsp;
+Added: <strong>      </strong>
 Unchanged: <strong>   </strong></td>
-Deleted: <td valign="top" width="114">   350<strong>   </strong></td>
+Added: <td valign="top" width="114">   350&nbsp;
+Added: <strong>   </strong></td>
-Deleted: <td valign="top" width="115">   26250<strong>    </strong></td>
+Added: <td valign="top" width="115">   26250&nbsp;
+Added: <strong>    </strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"></td>
 Unchanged: <td valign="top" width="192"></td>
 Unchanged: <td valign="top" width="115">< strong>       25</strong></td>
 Unchanged: <td valign="top" width="114">< strong>    350</strong></td>
 Unchanged: <td valign="top" width="115">< strong>    8750</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"></td>
 Unchanged: <td valign="top" width="192"></td>
 Unchanged: <td valign="top" width="115">< strong>      100</strong></td>
 Unchanged: <td valign="top" width="114"><strong>   450</strong></td>
 Unchanged: <td valign="top" width="115"><strong>   45000</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42">4</td>
 Unchanged: <td valign="top" width="192">Purchase of material 150 at 410.</td>
 Unchanged: <td valign="top" width="115">    150<strong>     </strong></td>
 Unchanged: <td valign="top" width="114">< strong>    </strong>410</td>
 Unchanged: <td valign="top" width="115">    61500<strong>     </strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"></td>
 Unchanged: <td valign="top" width="192"></td>
 Unchanged: <td valign="top" width="115"><strong>        25< /strong></td>
 Unchanged: <td valign="top" width="114">< strong>      350</strong></td>
 Unchanged: <td valign="top" width="115"><strong>      8750</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"></td>
 Unchanged: <td valign="top" width="192"></td>
 Unchanged: <td valign="top" width="115"><strong>      100</strong></td>
 Unchanged: <td valign="top" width="114"><strong>      450</ strong></td>
 Unchanged: <td valign="top" width="115"><strong>     45000</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"></td>
 Unchanged: <td valign="top" width="192"></td>
 Unchanged: <td valign="top" width="115">< strong>      150</strong></td>
 Unchanged: <td valign="top" width="114">< strong>      410</strong></td>
 Unchanged: <td valign="top" width="115">< strong>     61500</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42">5</td>
 Unchanged: <td valign="top" width="192">Issue of 50 materials. As per FIFO,  25 material issued from balance first lot and 25 from second lot.(25 x 350) + (25 x 450)=  20000</td>
-Deleted: <td valign="top" width="115">50&nbsp;</td>
+Added: <td valign="top" width="115">50
+Added: &nbsp;</td>
-Deleted: <td valign="top" width="114">25 x 35025 x 450</td>
+Added: <td valign="top" width="114">25 x 350
+Added: 25 x 450</td>
-Deleted: <td valign="top" width="115">875011250</td>
+Added: <td valign="top" width="115">8750
+Added: 11250</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"></td>
 Unchanged: <td valign="top" width="192"></td>
 Unchanged: <td valign="top" width="115">        <strong>75</strong></td>
 Unchanged: <td valign="top" width="114">      <strong>450</ strong></td>
 Unchanged: <td valign="top" width="115">< strong>      33750</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="42"></td>
 Unchanged: <td valign="top" width="192"></td>
 Unchanged: <td valign="top" width="115">< strong>      150</strong></td>
 Unchanged: <td valign="top" width="114">< strong>      410</strong></td>
 Unchanged: <td valign="top" width="115">< strong>     61500</strong></td>
 Unchanged: </tr>
 Unchanged: </tbody>
 Unchanged: </table>
 Unchanged: <strong> </strong>
 Unchanged: <strong><br clear="all" /> </strong>
 Unchanged: <strong> </strong>
 Unchanged: <strong>Last-In-First Out (LIFO)</strong>
 Unchanged: The following table shows the calculation of the Cost of issues and Cost of Stock in the LIFO method.  The Calculations are done on the basis of monthly period. In LIFO, all the arrival transactions are processed first to find out the order of issue.
 Unchanged: <table border="1" cellspacing="0" cellpadding="0">
 Unchanged: <tbody>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="38"><strong>  No.</strong></td>
 Unchanged: <td valign="top" width="159">< strong>Particulars< /strong></td>
 Unchanged: <td valign="top" width="104"><strong>   Quantity</strong></td>
 Unchanged: <td valign="top" width="107">< strong>Cost</ strong></td>
 Unchanged: <td valign="top" width="170">< strong>Value< /strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="38">1</td>
 Unchanged: <td valign="top" width="159">Purchase of material at 350</td>
 Unchanged: <td valign="top" width="104">  100</td>
 Unchanged: <td valign="top" width="107">   350</td>
 Unchanged: <td valign="top" width="170">  35000</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="38">2</td>
-Deleted: <td valign="top" width="159">Purchase of material (100) at 450.</td>
+Added: <td valign="top" width="159">Purchase of material (100) at 450.&nbsp;</td>
 Unchanged: <td valign="top" width="104">  100</td>
 Unchanged: <td valign="top" width="107">   450</td>
 Unchanged: <td valign="top" width="170">  45000</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="38">3</td>
 Unchanged: <td valign="top" width="159">Purchase of material 150 at 410.</td>
 Unchanged: <td valign="top" width="104">  150<strong>  < /strong><strong>  </strong></td>
 Unchanged: <td valign="top" width="107"> 410< strong> </strong></td>
 Unchanged: <td valign="top" width="170">   61500</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="38">4</td>
 Unchanged: <td valign="top" width="159">Issue of 75 material.  In LIFO the last arrival will be considered for issue.Issue will be made from the last lot of 150 at 410.75 x 410   =  30750.</td>
 Unchanged: <td valign="top" width="104">      75</td>
-Deleted: <td valign="top" width="107">  410</td>
+Added: <td valign="top" width="107">  410&nbsp;</td>
-Deleted: <td valign="top" width="170">      30750&nbsp;</td>
+Added: <td valign="top" width="170">      30750&nbsp;
+Added: &nbsp;</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="38"></td>
 Unchanged: <td valign="top" width="159"></td>
 Unchanged: <td valign="top" width="104">< strong>    100</strong></td>
 Unchanged: <td valign="top" width="107">< strong>    350</strong></td>
 Unchanged: <td valign="top" width="170"><strong>   35000</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="38"></td>
 Unchanged: <td valign="top" width="159"></td>
 Unchanged: <td valign="top" width="104">< strong>    100</strong></td>
 Unchanged: <td valign="top" width="107">< strong>    450</strong></td>
 Unchanged: <td valign="top" width="170"><strong>   45000</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="38"></td>
 Unchanged: <td valign="top" width="159"></td>
 Unchanged: <td valign="top" width="104">< strong>      75</strong></td>
 Unchanged: <td valign="top" width="107">< strong>    410</strong></td>
 Unchanged: <td valign="top" width="170"><strong>   30750</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="38">5</td>
 Unchanged: <td valign="top" width="159">Issue of 50 materials. As per LIFO, it issued from balance lst lot50 x 410   =  20500</td>
 Unchanged: <td valign="top" width="104">      50<strong>  </strong></td>
 Unchanged: <td valign="top" width="107">    410</td>
 Unchanged: <td valign="top" width="170">    20500</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="38"></td>
 Unchanged: <td valign="top" width="159"></td>
 Unchanged: <td valign="top" width="104">< strong>    100</strong></td>
 Unchanged: <td valign="top" width="107">< strong>    350</strong></td>
 Unchanged: <td valign="top" width="170"><strong>   35000</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="38"></td>
 Unchanged: <td valign="top" width="159"></td>
 Unchanged: <td valign="top" width="104">< strong>    100</strong></td>
 Unchanged: <td valign="top" width="107">< strong>    450</strong></td>
 Unchanged: <td valign="top" width="170"><strong>   45000</strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="38"></td>
 Unchanged: <td valign="top" width="159"></td>
 Unchanged: <td valign="top" width="104">< strong>      25</strong></td>
 Unchanged: <td valign="top" width="107">< strong>    410</strong></td>
 Unchanged: <td valign="top" width="170"><strong>   10250</strong></td>
 Unchanged: </tr>
 Unchanged: </tbody>
 Unchanged: </table>
 Unchanged: <strong> </strong>
 Unchanged: <strong><br clear="all" /> </strong>
 Unchanged: <strong>Weighted Average</strong>
 Unchanged: The following table shows the calculation of the Cost of issues and Cost of Stock in the weighted average method. The weighted average cost is calculated on a periodical basis and generally done on a monthly basis.  In this method the average cost of the item is calculated and that value is used for all the valuation purposes during the period. In Weighted average, all the arrival transactions are processed first to find out the weighted average cost of the item.
 Unchanged: <table border="1" cellspacing="0" cellpadding="0">
 Unchanged: <tbody>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43"><strong> No.</strong></td>
 Unchanged: <td valign="top" width="193">< strong>Particulars< /strong></td>
 Unchanged: <td valign="top" width="118">< strong>Quantity< /strong></td>
 Unchanged: <td valign="top" width="118"><strong>   Cost</strong></td>
 Unchanged: <td valign="top" width="118">< strong>Value< /strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43">1</td>
 Unchanged: <td valign="top" width="193">Purchase of 100 material at 350</td>
 Unchanged: <td valign="top" width="118">    100</td>
 Unchanged: <td valign="top" width="118">   350</td>
 Unchanged: <td valign="top" width="118">    35000.00</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43">2</td>
 Unchanged: <td valign="top" width="193">Purchase of material (100) at 450.</td>
-Deleted: <td valign="top" width="118">    100</td>
+Added: <td valign="top" width="118">    100&nbsp;</td>
 Unchanged: <td valign="top" width="118">   450</td>
 Unchanged: <td valign="top" width="118">    45000.00</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43">3</td>
 Unchanged: <td valign="top" width="193">Purchase of material 150 at 410.</td>
 Unchanged: <td valign="top" width="118">    150</td>
 Unchanged: <td valign="top" width="118">   410</td>
 Unchanged: <td valign="top" width="118">    61500.00</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43">4</td>
 Unchanged: <td valign="top" width="193"> Issue of 75 material at the Weighted average rate75    x 404.2857 =  30321.4275</td>
 Unchanged: <td valign="top" width="118">      75</td>
 Unchanged: <td valign="top" width="118">404.2857</td>
 Unchanged: <td valign="top" width="118">    30321.43</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="43">5</td>
 Unchanged: <td valign="top" width="193">Issue of 50 material at the Weighted Average price50 x 404.2857= 20214.285</td>
 Unchanged: <td valign="top" width="118">       50</td>
 Unchanged: <td valign="top" width="118">404.2857</td>
 Unchanged: <td valign="top" width="118">    20214.29</td>
 Unchanged: </tr>
 Unchanged: </tbody>
 Unchanged: </table>
 Unchanged: &nbsp;
 Unchanged: Total Inward Quantity = 100 +100 + 150   =  350
 Unchanged: Total Inward Value       =  35000+ 45000+61500 = 141500
 Unchanged: Wt. Avg.Cost = 141500/350   =   <strong>404.2857</strong>
 Unchanged: Total Issue Value   =  30321.43 + 20214.29 = <strong>50535.72</strong>
 Unchanged: Stock Value = 141500 - 50535.72 = <strong>90964.28</strong>
 Unchanged: Closing Stock    =  350- 75 - 50   =    <strong>225   </strong>
 Unchanged: Closing Stock Value = 225 x 404.2857  = <strong>90964.28</strong>
 Unchanged: The illustration clearly indicates the various methods of stock valuation and how it affects the value of issue and stock. The following table summarizes the calculation for comparative study purpose.
 Unchanged: The Closing Stock-on-Hand is 225 and purchase value is 141500.
 Unchanged: <table border="1" cellspacing="0" cellpadding="0">
 Unchanged: <tbody>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="183">< strong>Method< /strong></td>
 Unchanged: <td valign="top" width="124">< strong>Issue</strong> <strong>Value< /strong></td>
 Unchanged: <td valign="top" width="228">< strong>Stock</strong> <strong>Value< /strong></td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="183">Moving Weighted average</td>
 Unchanged: <td valign="top" width="124">50272.725</td>
 Unchanged: <td valign="top" width="228">91227.2625</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="183">FIFO</td>
 Unchanged: <td valign="top" width="124">46250</td>
 Unchanged: <td valign="top" width="228">95250</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="183">LIFO</td>
 Unchanged: <td valign="top" width="124">51250</td>
 Unchanged: <td valign="top" width="228">90250</td>
 Unchanged: </tr>
 Unchanged: <tr>
 Unchanged: <td valign="top" width="183">Weighted Average</td>
 Unchanged: <td valign="top" width="124">50535.7125</td>
 Unchanged: <td valign="top" width="228">90964.2825</td>
 Unchanged: </tr>
 Unchanged: </tbody>
 Unchanged: </table>
 Unchanged: As mentioned above, GoodBooks provides options to valuate the stock in any of the methods.  You can select different method of valuation for different items, if so required
 Unchanged: Please refer to  item master to specify which type of valuation you want to adopt for a particular item.
 Unchanged: Running the actual valuation process is very simple and is as shown  in Stock Valuation Process.
 Unchanged: &nbsp;

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