Variability Inventories’ Accounting Measurement

Abstract

The growing acceptance of International Financial Reporting Standards (IFRS) as the basis for financial reporting represents a fundamental change for the accounting profession.

The purpose of this study is to divulge the existing features of inventory accounting in accordance with IFRS standards. The study, based on a literature review and analysis of standards, develops a theoretical framework aimed at facilitating the understanding of the inventory accounting process and the choice of a method for their evaluation.

The emphasis is maid on the implication of the choice inventory valuation methods on profit, tax and closing inventory. In order to investigate the impact of the FIFO and Weighted Average methods of inventory valuation on profit, tax and closing inventory using practical illustrations calculations were made. The study demonstrates the direct impact the chosen method inventory valuation on the profit, tax and closing inventory of the company and also confirmed the availability significant correlation between items mentioned. Consequently, companies should determine the methods of inventory valuation before making decisions concerning inventories.