What is the most preferable Costing Method for stock??
Lifo, fifo, avg.cost, Monthly Avg.Cost, Std.Cost????
10 Replies
prasad Nilugal
( GST Practitioner & Accounts )
(14846 Points)
Replied 13 August 2019
FIFO is best method
Akash V.R.
(Student)
(23 Points)
Replied 16 August 2019
It depends on many factors. If prices are too fluctuating then the average price method is preferred. FIFO is widely used as it is more logical. If price movements are negligible standard price method is used.
sabyasachi mukherjee
(27654 Points)
Replied 16 September 2019
Now why FIFO method?
do you know?
Fair market Value or cost whichever is lowrr.
refer accounting standard 2.
do you know?
Fair market Value or cost whichever is lowrr.
refer accounting standard 2.
Akash V.R.
(Student)
(23 Points)
Replied 16 September 2019
AS 2 is applicable for presentation & disclosures in financials. But these methods are useful for internal analysis like arriving at cost of your product etc
sabyasachi mukherjee
(27654 Points)
Replied 16 September 2019
Ultimately how u disclose in balance sheet that is very essential.
Akash V.R.
(Student)
(23 Points)
Replied 16 September 2019
But internal analysis is also very much essential and important to arrive at your cost & thereby to arrive at a selling price which makes sense. Financials are end results but to get there you need to have a plan which is based on these internal analyses and projections.
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