HB Accountants

August

Stock Valuation

Most people know that under standard accounting principles, stock is valued at the lower of cost and net realisable value.

This simply tells the user how the company values stock and is often referred to as a ‘boiler plate' policy.

What it does not tell the user is how the value is determined, for example is it valued using standard cost, or a weighted average, last-in first-out or first-in first-out. It also does not tell the user how net realisable value has been determined.

Care should be taken when using the accounts figure to assess the value of stock. Some items may have been held for several years and appreciated in value.

Contact Keith Grover on 01992 444466 (or keith@hbaccountants.co.uk) for a free initial consultation
 

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