Accounting for Inventory

Abstract-This paper, based on the issued inventory valuation methods stipulated in current accounting standards of China, analyzes the different effectiveness resulting from the choices of different inventory valuation method. Taking the actual situation of the international and domestic environment into account, and by adopting the method of case analysis and material analysis, this paper puts forward suggestions and advocates the comprehensive learning of different issued inventory valuation methods under the guidelines of different accounting standards, drawing on their advantages so as to develop new issued inventory valuation methods which are more suitable for the future economic situation.

Keywords-inventory; valuation method; current situation; suggestions

Inventory is an asset of significance in enterprise.Different calculation methods can be applied in different production process. Moreover, the methods will be different according to different inventory system. This paper only discusses about pricing method in terms of inventory ex-factory. There will be difference in final accounting information when different issued inventory valuation method used.

I. INTRODUCTION OF INVENTORY VALUATION METHOD

The inventory valuation methods are undergoing constant change and development, during which there are several methods as follows: 1) Methods on the condition of non-actual cost: planned cost method, fixed cost method, and selling price method. 2) Methods on the condition of actual cost: first, methods based on time sequence include FIFO (first-in, first-out) method, LIFO (last-in, first-out) method, moving weighted average method, and next-in first-out method. Second, methods based on unit price include specific identification method, high-price, first-out method, low-price, first-out method, and last invoice price method. [1] Third, weighted average at the end of month method, and basic stock method.

Although there are lots of methods of inventory...