INVENTORIES
DECREE 2649/93.
Section 63. Inventories. Inventories represent tangible property for sale in the ordinary course of business, and those who are in production or are used or consumed in the production of others that will be sold.
The value of inventories, which includes all expenditures and direct and indirect charges necessary to put in a position to use or sale, to be determined using the FIFO (First In, First Out), LIFO (Last In, First Out), the identification specific or weighted average.
To recognize the annual effect of inflation and determine the cost of sales and inventory for the respective year, you must:
1. Adjusting for the annual PAAG the inventory.
2. Adjusting for the accumulated monthly PAAG, inventory purchases made in the year and other factors that are part of the cost, except for those with a particular form adjustment.
on a heading, for the same period, you can not make a double adjustment. This rule should be considered for the transfer of inventory during the production process.
monthly to recognize the effect of inflation, when using the perpetual inventory system, adjust the monthly PAAG owned inventory at the beginning of each month. When using the game system called inventory should also adjust the balances accumulated in the first day of respective month in the accounts of inventory purchases and production costs, when they do not have a particular form of adjustment. The values \u200b\u200bfor the respective operations for the month are not subject to adjustment.
Under either option, the ending inventory and cost of sales should correctly reflect adjustments for inflation, according to the method has been used to determine its value.
At the end of the period should be recognized loss contingencies stated value of inventories by the provisions required to conform to its net realizable value.
Without prejudice to special rules for the preparation of financial statements for interim periods is permissible to determine the cost of inventory and recognition of loss contingencies based on statistical estimates.
Section 63. Inventories. Inventories represent tangible property for sale in the ordinary course of business, and those who are in production or are used or consumed in the production of others that will be sold.
The value of inventories, which includes all expenditures and direct and indirect charges necessary to put in a position to use or sale, to be determined using the FIFO (First In, First Out), LIFO (Last In, First Out), the identification specific or weighted average.
To recognize the annual effect of inflation and determine the cost of sales and inventory for the respective year, you must:
1. Adjusting for the annual PAAG the inventory.
2. Adjusting for the accumulated monthly PAAG, inventory purchases made in the year and other factors that are part of the cost, except for those with a particular form adjustment.
on a heading, for the same period, you can not make a double adjustment. This rule should be considered for the transfer of inventory during the production process.
monthly to recognize the effect of inflation, when using the perpetual inventory system, adjust the monthly PAAG owned inventory at the beginning of each month. When using the game system called inventory should also adjust the balances accumulated in the first day of respective month in the accounts of inventory purchases and production costs, when they do not have a particular form of adjustment. The values \u200b\u200bfor the respective operations for the month are not subject to adjustment.
Under either option, the ending inventory and cost of sales should correctly reflect adjustments for inflation, according to the method has been used to determine its value.
At the end of the period should be recognized loss contingencies stated value of inventories by the provisions required to conform to its net realizable value.
Without prejudice to special rules for the preparation of financial statements for interim periods is permissible to determine the cost of inventory and recognition of loss contingencies based on statistical estimates.
INVENTORY SYSTEM To record and control the inventories, companies adopt appropriate systems to value their stocks of goods in order to determine its possible production and sales volume
understand the concept, characteristics and the fundamentals of the valuation of inventories may be useful for the company, since these are what really set the point of production that can take one period. The financial manager must have the relevant information to enable it to make management decisions that must be given to this area of \u200b\u200borganizational active. PERIODIC INVENTORY SYSTEM
Using this system, traders determine the value of stocks goods by conducting a physical count on a regular basis, which is called the starting or ending inventory as appropriate.
Beginning Inventory: The detailed and thorough inventory of goods that have a business to start up, after doing a physical count. Ending inventory
: The ratio of stocks at the end of an accounting period.
Through this system the company knows the value of the merchandise in stock at any time, without requiring a physical count, because the movements of purchase and sale of goods is recorded directly in the time of the transaction to your cost.
Companies adopting such a system should maintain an auxiliary of goods called "Kardex", which is recorded every item that is bought or sold. Addition and subtraction of all operations in a period results in the final balance of goods.
Comment: The companies that are by law required to file a tax return must use the perpetual inventory system coupling the criterion
goods inventories are all stocks at cost with which the company produces goods and sells its products
finished
METHODS FOR VALUATION OF INVENTORIES
Companies must assess their goods, so their inventory value, calculate the cost, determine the level of utility and production set their level of sales. Currently used methods for valuing these inventories:
1. Assessment by specific identification
in business whose inventory consists of goods the same, but each of them is distinguished from others by their individual characteristics of a number, mark or reference a particular cost, cars are a clear example of this type assessment because these seemingly identical but they differ by color, engine number, number, model etc.
2. Standard cost valuation
This method facilitates the management of auxiliary goods "Kardex" because only in quantities required be homogeneous units:
3. Valuation at cost
Assess inventory cost price means the company relates to the price of goods adquisición.Comentario: If you want to expand their understanding of these concepts through assessment of costing inventories in the channel will find articles and documents that explain in detail the foundations and application, see the file finanzas.Las goods companies must choose the rating system that best suits your needs and allows him to exercise a permanent control of them
METHODS FOR SECURING THE COST
The methods used to determine the cost of goods company is the weighted average, LIFO or FIFO and FIFO or LIFO, then presented their rationale and an example of its application:
1. Weighted average method
This method is to find the average cost of each of the items that are in the final inventory when the units are identical in appearance but not the purchase price, since they were purchased in different times and different prices. To set the value of cost of goods by this method takes the value of merchandise inventory and adding initial procurement period, then divide by the number of units plus the initial inventory purchased during the period.
2. FIFO or FIFO
applied to goods means that stockpiles first enter the inventory are the first to leave it, that means the first to be purchased are the first sold.
3. Or LIFO LIFO
This method is based on the last life in is the first out. This is the last acquired are the first sold. APPLICATION OF THE METHODS
In the following example is intended to explain the application of each of the methods for determining the cost of goods in inventory.
Quantity Unit Cost Total value
Beginning Inventory 10 Units.
$ 10,000 $ 100,000
Shopping
30 pcs.
$ 15,000 $ 450,000 Total
40 pcs.
$ 550,000 Sales
period
35 pcs. Ending inventory
5 pcs.
1.
weighted average total value = $ 550,000 = $ 13,750 Total 40
The average cost per item is $ 13,750
The value of ending inventory = 5 pcs. * $ 13,750 = $ 68,750
The ending inventory is valued at average cost in-stock merchandise.
2. FIFO or FIFO inventory
final value = 5 pcs. * $ 15,000 = $ 75,000
The ending inventory is valued at the cost of the last goods purchased.
3. Or LIFO LIFO inventory
final value = 5 pcs. * $ 10,000 = $ 50,000
The ending inventory is valued at the cost of the first in-stock merchandise.
4. Average final analysis
$ 68,750 $ 75,000
FIFO LIFO
$ 50,000
By analyzing the three methods can draw the conclusion that the lowest value is obtained using the LIFO, the highest in the FIFO and an interim valuation to the average. Inventory incluyeMaterias
raw goods owned by the company found in the cellar; Goods in transit goods on consignment
FEATURES ADVANTAGES DISADVANTAGES
understand the concept, fundamentals of the valuation of inventories may be useful for the company, since these are what really set the point of production that can take one period.
Administrator Financial information must be relevant to enable it to make management decisions that must be given to this area of \u200b\u200borganizational active.
PERIODIC INVENTORY SYSTEM
Using this system, traders determine the value of stocks of goods by conducting a physical count on a regular basis, which is called the starting or ending inventory as appropriate.
. Beginning Inventory: The detailed and thorough inventory of goods that have a business to start up, after doing a physical count.
· Inventory final: The ratio of stocks at the end an accounting period.
Inventories are tangible assets held for sale in the ordinary course of business or to be consumed in the production of goods or services for further marketing.
internal control inventory begins with the establishment of a purchasing department to be managing inventory purchases according to the process compras.Diariamente accumulate large accounts such as revenues, costs and expenses of a can compañía.Se obtain account balances reconciled important, banks, inventories, accounts receivable and accounts pagar.La documentation to support the recorded information can be verified easily and seats eficaz.Los to be counted in the general journal, show the accuracy of daily debits and credits.
accounting for inventories is very important for the accounting of goods, because the sale of inventory is the heart of the business.
The costs of purchases of goods must dirirge to the account entitled: Costs of Shopping. This account has a debit balance and is not in the Balance Sheet. Returns
purchase, refers to the account that is created to reflect all that the company purchased merchandise returns for any reason, although this has reduced the purchase of goods shall be paid to the account shopping.
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