In the previous class, I told you about cost and NRV, today
we will take our discussion forward and I will make the
link from the previous discussion only.
Just quickly flip through the pages of your register, don't
think that I am not seeing you, I can see you, quickly
start flipping through the pages.
In all the examples that I gave you yesterday, I gave you
quantity given.
Be it the example of T-shirt, be it the example of wood in
raw material, be it the example of metric ton, be it the
example of 100 metric ton of pulp, be it the example of big
rolls of paper.
Be it any example, I gave you quantity. After giving you
quantity, I taught you how to calculate cost and NRV.
But what if, what if we are not given that quantity, what
if we have to find that quantity ourselves.
If raw material is left, then how many units are left, how
many pieces of wood are left, how many kgs of pulp are
left, we have to find it ourselves.
So how will we do it, this is our next discussion, that is
our next discussion, periodic and perpetual systems.
Sir, this name and concept are not connecting at all, we
are talking about some quantity and what is written here as
periodic and perpetual.
If you do it, you will understand now.
Sir, don't start giving examples again, what should I do
with this example.
Sir, there are many examples, please bring it on the
question of our material.
So listen to the fun part.
Whatever 2-3 examples I will make you do today, the first
5-6 questions of your study material will be automatically
covered.
I have picked those examples from there.
These are the questions of study material, I have to serve
you in the form of example today.
Yes, this will be fine sir, do this.
So it seems that our study material will also be covered.
Okay, let's go for it now.
Whatever is written, we will explain to you, but when?
After a few examples.
Dude, do you know what the meaning of the example is?
You started thinking first and reading means you started
writing first.
So which thing is right, to think first or to write?
Sir, this is not a thing to think that the option to think
first is right, not to write.
Example, let's write down the example.
Date, quantity purchased, quantity issued.
Do one thing, write down the purchased and issued together.
No, first write down the price per unit here.
Then write down the issued quantity.
First of all, on December 4, 900 units were purchased for
the price of 50 rupees.
Then on December 5, sir, tell me which unit is this?
You assume that we are buying a condenser, which is a raw
material for us.
It is used to make radio sets.
This is the first question of your study material.
Raw material is a condenser, which is used to make radio.
I am taking the example of that.
On December 4, we bought 900 condensers for the price of 50
rupees.
So that we can use them as a raw material in making radio.
So radio is a finished goods, condenser is a raw material.
Then what happened on December 5?
On December 5, we did not buy anything, but issued 500
units.
Sir, what does issue mean?
Issue means issued for consumption.
500 units were used to make radio.
500 condensers were used and fitted in the radio.
Okay, sir.
Then what happened on December 10?
Sir, 6, 7, 8, 9 days are not available.
These days nothing happened.
Neither purchase nor issue.
On December 10, we purchased 400 units for the price of 55.
There is no issue.
Then on December 11, we purchased 300 condensers for the
price of 55.
There is no issue.
On December 19, we purchased 200 condensers for the price
of 60.
There is no issue.
And on December 20, we issued 600 units.
And then on December 28, we purchased 800 units for the
price of 47.
And on December 29, we issued 500 units.
So I would like to know from you that if you are told on
December 31 that sir, what value will be noted for the raw
material, i.e.
Condenser.
What value will be noted in your books?
So how will you calculate the value?
For that, sir, we need cost.
For the valuation of raw material, we need cost, right?
Absolutely, sir.
The valuation of raw material can be done only then.
So to calculate the cost, the example I gave yesterday had
quantity given in it.
This time you will have to find the quantity.
You have to find out the quantity yourself this time.
Oh, so this question is here.
You will be able to find the cost only if you find the
quantity.
Okay, sir.
Okay, so we have gone one step further.
We have gone one step further.
Here we will have to find the quantity ourselves.
Let's start.
For this, we make an inventory register, which we also call
an inventory ledger.
In that, we will write the entire record and go.
And see, we will have to make this inventory ledger three
times today.
You will have to make this three times.
You have to prepare it three times only today.
We will do it one by one and see how it will be.
Inventory ledger.
Here we write all the data.
How much did we purchase?
Here I will do one thing.
I will also make you write the opening figure.
How much did we already have?
Your institute has kept the opening figure to write.
Rest you write.
How many units did we purchase more?
How many units did we issue?
And how many units are left with us today?
We will write all this in detail and go.
Okay, sir.
Below all three, write QRA.
Below the closing stock also write QRA.
Sir, what is the name of this QRA?
We have heard QRG.
It is a hospital.
What is this QRA?
QRA is Quantity, Rate and Amount.
We started on 4th December.
We did not have anything on 4th December.
Nothing will come in the opening on 4th December.
We purchased 900 units.
At the rate of Rs. 50, the amount was Rs. 45,000.
We did not issue anything on 4th December.
So the closing stock will also remain the same.
900 x 50 means Rs. 45,000.
After this, the date came on 5th December.
On 5th December, the opening figure will come.
This will be the closing figure on 4th December.
900 x 50 means Rs. 45,000.
We did not purchase anything on 5th December.
There is no purchase at all.
We have issued 500 units.
The 500 units that you have used to make the radio, the
condensers that you have fitted, can you tell us which are
those 500 condensers?
Sir, will it be among these 900?
Will it be among these 900?
Is this a question?
How are you asking a question?
Out of the 900 condensers that we have, only 500 will be
used.
So the 900 condensers were worth Rs. 50.
These 500 condensers that have been used, these will also
be worth Rs.
And the remaining 400 condensers worth Rs.
50, i.e.
Rs. 20,000.
Right now, this seems easy to you.
But right now, after one or two steps, you will have to
think that which condensers will be issued.
You will have to think now.
Then came 10th December.
The opening figure of 10th December will be this.
400 units worth Rs.
50, will be worth Rs.
We have also purchased on 10th December.
Only 400 units.
And worth Rs.
55, will be worth Rs.
There is no issue.
Tell me, how much total stock do I have?
And write both separately.
Write both separately.
The 400 units worth Rs.
50, are those that we have left from the previous day.
And worth Rs.
455, which we have purchased now, this time, the closing
stock is 400 and 400 total 800 units.
The first 400 units worth Rs.
50, i.e.
Rs. 20,000.
and the other 400 at the rate of 55, that is 22,000
After this, the next date will be 11th December
On that day, write 400 in the opening
50, 55, 20,000, 22,000
Very good, well done
What happened on 11th?
On 11th, I purchased 300 units more at the rate of 55, 300
into 55 the amount became 16,500
Is there any issue on 11th?
No sir, there is no issue on 11th So my dear friends, there
are 3 units in the closing stock
Oh my god! 400, 400 and 300 400 units for 50, 400 units for
55 and 300 units for 55
Sir, why are you writing them separately?
When there is an issue, we will know which one is the issue
If we don't write them separately, how will we know where
the issue is coming from?
20,000, 22,000 and 16,500
The next date that we have is 19th December
Write the same in the opening 400, 400 and 300 50, 55, 55
20,000, 22,000, 16,500
What is the purchase on 19th?
Sir, 200 units at the rate of 60
200 units at the rate of 60
This became 12,000
It came in the closing stock 400 units for 50 20,000 400
units for 55 22,000 300 units for 55 16,500 200 units for
60 12,000 Stop sir, stop
Yes, it stopped
Now we are getting the next date i.e.
20th December
On 20th December, we will get this in the opening 400, 400,
300 and 200
400 units at the rate of 50 i.e.
20,000 400 units at the rate of 55 i.e.
22,000 300 units at the rate of 55 i.e.
16,500 200 units at the rate of 60 i.e.
We did not purchase anything on 20th
Very good
But on 20th, we have issued some units
600 units
Now tell me, which 600 units would those be?
You must be wondering
Sir, what are these kids playing with us?
Now tell me, which 600 units would those be?
400 units at the rate of 50 and 200 units at the rate of 55
or 200 units at the rate of 60 300 units at the rate of 55
and 100 units at the rate of 55
Which of these 600 units would have been issued?
You have 4 types of inventory
The one you purchased at the rate of 50
The one you purchased at the rate of 55
And once 400, once 300
The one you purchased at the rate of 60 Which units are
being issued?
Which 600 units are being used?
This is where the whole game is
Now some people can say
Sir, what has come first
should be used first
i.e. 400 units at the rate of 50 which we purchased at the
very beginning should be used first
After that, 200 condensers have been used
Those 200 should be taken out from here
200 x 55 i.e.
And we will be left with in stock 400 units at the rate of
50 are all finished 200 units at the rate of 55 will be
left with 11,000
300 units at the rate of 55 are left with 16,500
And 200 units at the rate of 60 will be left with 12,000
This is called First In First Out
The condensers that have been purchased earlier will be
used earlier
They will be used earlier to make finished goods to make
radios And the ones that have been purchased later will be
used later
First In First Out
Sir, could there be any other way?
Yes, there can be another way
Start from the bottom
It is called Last In First Out
That is called Last In First Out
We will learn that in a while
There is another way
Average all these prices
This is also fine, sir
Average all the prices
We will see all that in a while
Now keep your full focus only on First In and First Out
Your full focus should be here
Okay, sir
So after 20th, the next date will be 28th
That day in the opening we have 200, 300 and 200 units 55,
55 and 60 units 11,000, 16,500 and 12,000
We purchased
We are not satisfied with our purchase
We purchased 800 units again at the rate of 47
Multiplied by 37,600
There is no issue on 28th
So in the closing stock we have 4 types of stock again 200
units 55, 11,000 300 units 55, 16,500 200 units 60, 12,000
And 800 units which you have just purchased at the rate of
47 37,600 The next date is 29th
Write the opening balance quickly 200, 300, 200, 800 55,
55, 60, 47 11,000, 16,500, 12,000 and 37,600
Sir, this is getting boring
This is not boring
It will give you numbers 4 numbers in the paper
This is not boring
This is called simple
Now if you face any difficulty
If you start calling simple things boring Then tell me
What will we write in the paper?
Kapil Sharma
No sir, we don't find it boring
We want 4 numbers
Well done
On 29th, 500 units are being issued
There is no purchase 500 units are being issued
Now tell me
According to first in first out
Which will be those 500 units?
Sir, take this 200 unit which is coming first
And take this 300 unit
Will it be 500 units?
Very good 200 units of 55 have been used
Now nothing is left in them
300 units of 55 have been used
Not a single unit is left in them
Yes, 200 units of 60 are left 12,000
And 800 units of 47 37,600
After this there is nothing in the transaction
So tell me finally
How many units are left with us?
Sir, 1000
And what is their amount?
Sir, 12,000 and 37,600 49,600 That means if we want quantity
Then we can get quantity like this
If we want quantity
Then we can get quantity like this
We will need it
And do you know what we call this?
This is first in first out method
Or first in first out approach
I will say it with love
FIFO Not FIFI
FIFI is doggy's name
FIFO F I F O means FIFO
Very good
The first thing that came in this We have taken it out
earlier
That's why it is called FIFO
Should I tell you one more method? I will tell you one more
method
Not about FIFO
FIFO is the same
I will discuss it later
I will tell you such a method That you don't have to make
register
Sir, why didn't you tell me earlier? Whatever is part of
syllabus
You will have to teach
Ask this in paper
So, it is not necessary to know Ok, ok, ok
Don't scold me sir
Ok, I will take care from now You talk like this
What to do in scolding
Inventory ledger
You don't have to make it
You don't have to do what you did
Do you know what is the substitute for that?
Inventory ledger
Substitute is
Physical verification
It's a simple thing
I say in Rajesh Khanna's style
It's a very simple thing
You go to their godown
Look there
How many condensers are kept
You will get 1000 condensers
Count it one by one
What is the need to make it so big?
What is the need to make such an inventory ledger?
Yes, it is right sir
That is called physical verification
You go there You will get to know 1000 condensers are kept
in godown 1000 condensers are in stock
And then on that 1000 condensers
When you do physical verification
After that
You have to calculate cost 49600 At that time, you should
have put FIFO
You would have said
What is the total purchase?
You would have said total purchase is 900, 400, 300, 200
and 800
What is the total issue?
Sir, total issue is 500, 600, 1100
And 500, 1600 units
So 1600 units
Which is the issue
If we follow FIFO first in first out
Then 900 units
This one must have gone 400 units this one must have gone
And 300 units this one must have gone 1600 units have been
used
That is, this one is worth 260
And 847 must have been left
See now also 200 x 60 is 12000
And 37600 and you are getting 49,600
Oh my God!
One way is to make an inventory ledger and put FIFO make an
inventory ledger in full detail and follow the first in
first out at that time and one way is go to the physical
store and see the units there are 1000 units after that
when you have to calculate the cost then you put FIFO that
which will be these 1000 units if 1600 units are issued,
then the first 1600 units are issued the last 200 and 800
are left with us according to that, you use the price of 60
and 47 calculate the cost and you
get the same 49,600 so which one is good? when the answer
has to be the same then tell me which one is good?
Sir, I think this second one is good
I would like to give you a disclosure in your study
material, these questions are drafted in such a bad way
that you will be shaken you will not know that in the
question from which point of view the question has been
asked and the most interesting thing is that you will solve
it
this is the specialty of this chapter you will not know
where the questions are coming from just by reading from
the top you will get an idea that you will solve it and you
will get the answer
I am saying you will get the answer you will not even know
how they have drafted the question at which stage they want
you to do
so sir, that thing is good but the question is not there
that thing is wrong if you are learning something, then
learn it in a complete way it is necessary to ask in the
exam at an advanced level then you will get stuck there the
question is drafted in a very bad way that is why I did not
consider it necessary to make you do those 5 illustrations
I am making them an example and making them a part of my
teaching concept
I will make you do those 5 there they have broken the hands
and legs of the questions there is a complete discussion
here there is a complete discussion here they just picked
it up from somewhere and put it in the middle there is a
complete discussion here so sir, tell me which one is better
I think the second one is better the physical verification
one go and count and at the end we will get to know what is
the problem in this
I will tell you what the problem is what is the problem in
the second method in physical verification the first thing
is when you go and count it will take 2-3 hours to count
1000 condensers for that long will you have to stop the
business yes, for that long when you count not a single
condenser will be able to move otherwise the counting will
be disturbed it will move and get used then you will have
to count again so for the period of time you count you will
have to stop the business you will
to stop the radio production at that time you cannot use
any condenser the big businesses in which every second
thousands of products are produced this is a big problem
for them how will they allow you to go and seal their
warehouse and keep counting they need material from there
every second how will they allow you this is the work of
those businesses who have a lot of time they say we don't
have any business for 3-4 hours we don't have to make a
radio go and count this is the work of small
big businesses make ledgers and there are other benefits of
making an inventory ledger if you are making an inventory
ledger then you know the balance of every date what is the
closing balance on every date when you know the closing
balance on every date then you get a lot of help in
inventory management that how much to order how much demand
is there in the market what is the supply how much stock do
we have you get this help every day this is very useful for
big businesses this gives daily
about inventory what is physical verification one day you
will go and see how much stock is there you will know about
that day you don't know anything else so big businesses
always follow inventory ledger and we call this perpetual
method when we make inventory ledger we keep a daily record
daily opening balance purchase, issuer, closing stock that
is called perpetual method perpetual method and my dear
friends when we go one day and do physical verification
that is called periodic method or
system periodic method or periodic system
this is the part of our discussion today periodic and
perpetual system periodic and perpetual system ok sir you
told us that when we make a register we have perpetual
method in which we keep a daily record and when we do
physical verification small businesses that is called
periodic system but you must have seen even if it is
perpetual method
I followed FIFO even if it is physical verification
I followed FIFO first in first out what happens if I don't
follow first in first out
I follow last in first out what happens if I follow last in
first out let's make it again if you are hardworking if you
believe in hardwork then make it again if you think we are
super intelligent we will not make it again once we have
done something we don't want to do it again then it is your
wish this time we will make it fast don't worry it will be
done in 5 minutes but my opinion is if we learn something
for the first time then we should learn with determination
we should learn with
if for the first time you think we have become a hero now
we have understood that we don't want to use shortcut now
weighted average price method is left so why do you want to
make it fast write it again it may take 2 minutes or extra
no problem but write write till the time we don't see the
present till then we don't open our mind
I have felt this you don't know on 4th December there was
no opening stock we bought 900 unit at the price of 50 it
will be 45000 there is no issue 900 into 50 is 45000 next
date is 5th this is the opening balance 900 into 50 is
45000 we didn't purchase anything issued 500 units this
will be 50 units 25000 400 units left 50 units is 20000
next date is 10th December 10th December is the opening 400
into 50 is 20000 we purchased 400 unit at the price of 55
is 22000 there is no issue 400 into 50
400 we purchased 450 into 50 is 450 there is no issue next
date is 11th December 400 into 50 is 400 50 into 50 is 55
is 20000 on 11th December we purchased 300 into 55 is 16500
there is no issue we purchased 400 into 50 is 20000 400
into 50 is 20000 400 into 55 is 22000 300 into 55 is 16500
next date is 19th December opening stock is 400 into 50 is
400 300 into 50 is 55 50 into 55 is 25000 22000 16500 19th
December we purchased 200 units at the price of 60 at the
price of 60 is 12000 now we
4 types of stock 400, 400, 300, 250 55, 55, 60 20,000,
22,000 16,500 and 12,000 if I wanted it could have stuck
from there and could have made you write further but I
thought once the kids will write it took only 2 minutes we
have reached where we should have been write opening 400
into 50 is 20000 400 into 55 is 22000 300 into 55 is 16500
and 200 into 60 is 12000 on 20th we issued 600 units when
we read FIFO we saw that we purchased 600 units from these
the first 400 will go and the next 400
go but do you know what last in first out says? last in
first out says pick it up from the bottom first use this
200 use this 300 and use 100 units from this in this way
issue 600 units it says first issue 200 60 is 12000 then
issue 300 500 is issued 200 and 300, 100 is left pick up
100 from this pick up 400 units from 55 5000 5000 this says
last in first out so in this way 200 units are over 300
units are also over 300 units are left out of 400 55 is
16500 and these 400 units are still left
we purchased in the beginning which means
FIFO method says last in first out Don't give the old stuff
to the customer, give the new stuff to the customer
What did FIFO say? FIFO used to say that take out the old
stuff quickly, the new will be sold but the old will not be
sold
So which one do you think is better?
To be honest, FIFO is more sensible, first in first out
Use the old stuff, otherwise it will rot, then it will not
be usable
Then it will become your loss
The new stuff is the latest, it will be sold, in a few days
The demand for the latest will be high, so take out the old
stuff first
That's why FIFO has more tail, while LEAFO has less tail
FIFO has more tail, while LEAFO has less tail
Tail means demand, requirement, respect
Now let's see what we have left in the units
We have more work to do
After 20th, we have to purchase more on 28th
Run this further
On 28th, you will get 400 units for 50,000, 20,000 300
units for 55,000, 16,500
On 29th, you issued 500 units more
No sir, purchase on 28th 800 units for 47,000, 37,600
37,600 There is no issue, so you have stock 400 units for
50,000, 20,000 300 units for 55,000, 16,500 800 units for
47,000, 37,600
Then comes the date, 29th
Write the opening balance
Issue is 500
Remember, last in first out
So 500 will be used from the last 800 500 x 47 will be used
from these 500 x 47 will be 23,500 300 x 47 will be 14,100
No issue in 300, no issue in 400
These are as it is 400 x 50,000, 20,000 300 x 55,000, 16,500
See how many units are left
Sir, 400, 300, 300
Unit is still 1000
Absolutely right
See the amount
Sir, 20, 16, 36, 500, 600 50,600 My goodness
Amount has been changed
If we use perpetual system from FIFO method
The answer is 49,600
If we use perpetual system from LIFO method
The answer is 50,600
From here you get to learn
Your answers change
As per the FIFO and LIFO which method you are applying
What is the reason for this? Price goes up and down
The price of the first unit remains
Price of the last unit remains
Your answer has to be different
Sir, if we apply LIFO method
Your physical verification
It is simple
If you go for physical verification
You will get 1000 units
There will be no change in units
But once we apply price
How will we apply price?
I will write the question again
We did cutting
The question was 900 units, 400 units, 300 units, 200 units
And we purchased 800 units 50, 55, 55, 60, 67
And the total issue is of 1600 units 500, 600 and 500
If you go for physical verification
You will get 1000 units in godown
Don't worry about that
But when you calculate the value
When you do physical verification
When you convert 1000 units into cost
What will you do when you apply LIFO?
You will say, last in first out
So, 1600 units have been consumed
If we go from the bottom
So, 800 would have been consumed 200 would have been
consumed
So, 1000 300 would have been consumed
So, 1300
And 300 would have been consumed
So, 1600
Out of this, 100 units would have been left
For Rs.
And 900 units have been left
For Rs.
According to this 900 x 50
And 100 x 55
Our answer will be 45,000 and 55,000 50,500 Oh my god
That means
If we apply LIFO method in physical system
In periodic system
Then also the answer changes
LIFO If you apply FIFO
Then the answer is same
But if you apply LIFO
Then the answer is changing
Remember this
Please remember this
Sir, write this clearly
You have to write this clearly
So, write in the last example also
How was 1000 left
Write in the last example also
How to apply in periodic system
I am writing in the first example
Quantity left in stock
Is equal to
Purchase 900
Plus 400
Plus 300
Plus 200
Plus 800
Minus 1600 1000 units
Applying first in first out 1600 units
Which would have been consumed 1600 units
Consumed are 900 Purchased on 4th December 400 Purchased on
10th December 300 Purchased on 11th December
Therefore Left in stock
Is equal to 200 units 60 rupees 12,000 800 units 47 rupees
Total 49,600
You can write this clearly
Write this clearly
Quantity left in stock
Is equal to 1000 units 900 plus 400
Plus 300
Plus 800
Minus 1600
Applying LIFO
If we apply last in first out
Then what will happen
In this case, this will be used 800, 200, 300
Out of this 100
Applying LIFO 600 units consumed
Would be 800 Purchased on 28th December 200 Purchased on
19th December 300 Purchased on 11th December 100 Purchased
on 10th December
Therefore 300 units 500 units
Purchased on 10th December 55 each 900 units
Purchased on 4th December 50 each 16,500 45,000 500 500 500
500 500 500 500 500 500 500 500 500 50,500 What did we see?
We have seen that there are two ways to make a ledger to
calculate quantity or to go and count it in one day
Ledger is calculated daily, if you go and count it in one
day, you get to know the figure of one day
You have to stop the business by going there
But it takes hard work to make a ledger
You need an accountant to make a ledger and it is a little
expensive
But ledger has its own advantages
Whether you make a ledger or do physical verification
You can put FIFO in both or you can put LIFO
The answer will vary according to the method you are
applying in any system.
The answer will vary according to the method you are
applying in any system.
The answer will vary according to the method you are
applying in any system.
While following these methods, you can apply FIFO, LIFO,
and LAST IN FIRST OUT.
There is one more line written here, which are not mutually
exclusive but complementary in nature.
Physical Inventory System, Periodic and Perpetual Inventory
System both are complementary in nature.
Sir, what is the meaning of complementary?
If a businessman wants to use both, he can use both at the
same time.
Now we feel that either we will make ledger and calculate
daily quantity or we will do physical verification.
One day we will go and see how much is there.
But there are some businesses that use both.
They use both perpetual system and physical system.
Sir, what is the need to use both? The answer is the same.
Do you know why they use both?
First, they make ledger from perpetual system and see how
many units are coming.
1000 units are coming.
And whether the ledger made from perpetual system is
correct or not, there is no mistake in it.
And whether we actually have 1000 units in stock or not.
Only 1000 units came out in the register.
Whether it is in reality or not.
For this, they also do physical verification.
For this, they also do physical verification, my dear
friends.
The register says that 1000 units are left.
But whether there are 1000 units or not.
To check this, some businesses also install physical
verification and periodic system.
Stop the business for a while and check whether we have
1000 units or not.
If the business can afford this, if it feels right, then it
is our choice.
This is the meaning of complementary.
And this is the meaning of not mutually exclusive.
Do you know who comes in not mutually exclusive?
Who comes in mutually exclusive?
You must have heard of Krishna Comedian and his uncle
Govinda.
These two are mutually exclusive these days.
Mutually exclusive means that if one is at one place, then
the other cannot be there.
If the other is at that place, then the first cannot be
there.
Both cannot come together.
Both have fights and tensions.
Mutually exclusive means those things that cannot come
together.
Not mutually exclusive means those things that can come
together.
And they are also called complementary in other words.
So, our periodic and perpetual inventory system can come
together.
They are complementary.
There is no fight between them.
Okay, sir.
Okay.
So, this was about first in first out and last in first out.
I would like to take you to the third method.
From the third method also, we can find out the quantity
and price.
That is called Simple Average Price Method.
We have to solve this question using Simple Average Price
Method.
Same as in above examples.
Apply Simple Average Price Method.
We bought something for 50, 50 again, 50 again, 60 again,
and then bought on 47.
Divide it.
1, 2, 3, 4, 5.
How many times did you buy things?
Five times.
Find out the average.
What is the average? 50, 50, 50.
Wait a minute, friend.
53.40 Take out the average price and multiply it by the
quantity you have left, 53.40 Your inventory is 53,400
Your inventory is 53,400
Sir, this is an amazing solution There is no problem in this
But if you think a little bit
So where did this quantity 1000 come from?
Where did this quantity 1000 come from?
Neither did we make ledger
We didn't make ledger in this method
So how will we know that this is the quantity of 1000?
There are only two ways
Either make ledger or do physical verification
We didn't make ledger in this method
So we will definitely do physical verification
That is, my dear friends
Both can be used in FIFO
Both can be used in LIFO
But if you are following a simple average price
It means you want to do simple work
So you are going straight
Counting how many units are left, 1000 units
By averaging whatever was bought at the price
Multiplying it and getting the answer
This can only be done in the case of physical verification
Simple average price
When we are applying the simple average price method
Understand, we are not making ledger
We are not maintaining inventory ledger
We are not following the perpetual system We are going
straight, doing simple work
Just doing physical verification
On the basis of those units, we are getting the answer by
averaging
We don't make inventory ledger here
You see, the answer is different this time too
The answer is different in FIFO, the answer is different in
LIFO
In LIFO also, the answer is different in physical
verification
The answer is different in perpetual
And here in simple average price
It doesn't look like perpetual, it looks like physical
The answer is different in that too 53, 400
So why is there so much variation, sir?
This is the special thing about inventory
That's why inventory is given so much importance in accounts
This is a very flexible thing
There is a lot of diversification here
This is very flexible
There is a lot of diversification here, my dear friends
53, 400 came
Sir, which method is right?
All are right
Whatever company wants to put
Its wish is just to give a disclosure below
That we have used this method But still you will see
Now I am going to use my first class
But still you will see that method will be right
For any company According to which its closing stock has
come out a little less
Till now, the lowest closing stock was coming in FIFO
So if we advise this company whose figures are these
Then we will tell it to put FIFO
Why sir?
Because your closing stock is coming out less from it
Only 49, 600
And if the closing stock comes less
Then profit will also come less
Remember, I taught in the first class
Closing stock and profit have direct relation
So if closing stock is coming less, then profit is also
coming less
If profit is less, then tax will also be less
So if you want to save tax, then this method will be right
You will have to advise in this way
See what I have taught you
Now understand the importance of this
When you become a CA in the future
The client will tell you to plan a little profit for tax
If you want to plan through inventory
Then these methods will be available to you
Inventory, I must have said in the first lecture
Let's up and down
You don't have to up and down in the air Reduce M & E,
increase M & E
You apply this method
Then let's see which method is reducing inventory
According to that, you apply that method and try to save tax
According to each client, the figures will be different
So you have to apply and see which is right for whom
Okay? Okay sir, yes okay
So we have the weighted average price left
Only and only
We have also covered the simple average price
Remember what I said
We can use FIFO in both places
In physical inventory and perpetual
This is very important
You can also use LIFO in both places
Even while making ledger
You will need LIFO or FIFO
And during physical verification, FIFO or LIFO will also be
required
But when we apply the simple average price
Then we only have to do physical verification
No need to make ledger
The same thing happens again in the weighted average price
If we apply the weighted average price method
Then we may need it during physical verification
And when we make a perpetual system ledger
Then also we may need to take the weighted average price
How sir?
This is my last thing for today
I will prove it to you
Thank you
Example no.4 Using same figures, apply weighted average
price method.
1. Inventory Ledger
2. Quantity Rate Amount
Example no.5
Example no.6
Example no.7
Example no.8
Example no.9
Example no.8
Example no.9
Example no.10
Example no.20
Example no.21
Example no.29
Example no.31
Example no.32
Example no.33
Example no.36
Example no.40
Example no.41
Example no.42
Difference between Periodic and Perpetual System
Example no.42
Example no.43 but not today now this specific
identification and two more things i have to tell you today
i have taught you to calculate quantity we have two ways
make register inventory ledger which is called perpetual
method or go and do physical verification see how much
counting is there whether you make inventory ledger or you
do physical verification in both you can use FIFO, LIFO and
weighted average method
and what you can do you will need it when you make
inventory ledger you need to issue from start or issue from
below or take weighted average when you do physical
verification you need it which is the first or last issue
so you need it you don't need it in simple average you just
need to do weighted average that is the simple method ok
sir today we have discussed about quantity there are few
more things which we will discuss in next lecture practice
this much your first five illustrations of
metal are over you don't need to do that although i will
give you my book in that also first five questions are
covered in my book ok thank you so much bye bye and take
care