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The main task of accounting for the expenditure of inventories is to determine the cost
at which inventories are debited from the organization's balance sheet.
Thus, inventory accounting is:
control over their timely and complete posting, over their safety in storage places;
timely and complete documentation of all
operations on their movement;
correct determination of transportation and procurement costs and the actual cost
of harvested stocks; control over the state of warehouse stocks;
identification and sale of material reserves that are unnecessary for the subject in
order to mobilize internal resources; obtaining accurate information about the balances
and movement of stocks in the places of their storage.
cost of inventories received free of charge is determined by the market value on the
date of capitalization.
When property
is received free of charge, taxable income is increased by the value of
this property, but not lower than its balance sheet value, which is attributable to the
transferring party.
In the production process, materials are taken into account in different ways. Some of
them are completely consumed in the production process (raw materials, materials,
components,
semi-finished products, etc.). Others change only their shape (lubricants,
varnishes, paints). The third ones are included in the product without any external changes
(spare parts), the fourth ones only contribute to the manufacture of products and are
included in their mass or chemical composition (tools, overalls, etc.).
The most common inventory valuation methods include the following:
1. The method of piece evaluation. Each item of inventory is individually described and
evaluated, and accounting is kept at its actual cost. The actual commodity flow is monitored
and accurately displayed. Each unit of the final product can be identified and valued.
2. First in stock - first in production (FIFO). This method is based on the assumption that
the longest held inventory items are the first to be sold or used. Inventories at the end of
the period are considered to be acquired in the most recent purchase.
3. Last to stock, first to production (LIFO). With this method, valuation is based on the
assumption that inventory items purchased last are sold or used first. The balance at the
end of the reporting period is estimated at the earliest purchase.
4. Average cost method. When it is used to estimate the flow of goods, it is assumed that
all products ready for sale are randomly mixed and, when sold, are taken from the
inventory at random.
5. Moving average method. When using it, it is assumed
that the commodity flow is
randomly mixed with each addition of a new batch of inventory, and their withdrawal for
production or sale is also random and from the total mass at the same moment.
In conclusion, it should be noted that accounting for inventories at enterprises should be
transformed into international accounting standards, due to the need to update national
accounting standards.
