CPT Chapter Inventories

CA CPT chapter “Inventories” deals with the different methods of valuing the cost of inventories and the determination of the Gross Profit margin. Valuation of inventories is critical since it can affect the profits of the organization as also its assets position.The chapter also looks at the intricacies in physical counting of stock.

With Sheela Warrier.Duration:3hrs 25min 

Notes

Few things covered by us

Index

Terminology
Business Flow
Types of Inventory
Why Inventory Valuation?
Basis of Inventory Valuation
Purchase Cost
Methods of Inventory Valuation
Accounting Records vs Cost Records
Inventory Record System
Stock Taking

Terminology

Current Assets - assets that can be converted to cash within a year
Current Liabilities- obligations that have to be met within a year
Working Capital = Current Assets - Current Liabilities
Liquidity - the degree of ease of conversion of an asset to cash
Current Ratio = Current Assets / Current Liabilities
Direct Cost - cost that can be identified with the product
Overhead - indirect cost and cannot be identified with a specific product
Gross Profit Margin = (Gross Profit / Net Sales) x 100
Accounting Standards- ensure uniformity in the preparationof financial statements

Why Inventory Valuation?

True Income
True Financial Position
Liquidity Analysis
Statutory Compliance

Non Historical Costs

Standard Cost
Adjusted Selling price

CPT Exam Exposure

Take Quiz

Depreciation

Bank Reconciliation Statement

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