Question 1
1.1
FIFO Method
Purchases Issues and returns Balanc
Date Quantity Price Amount Quantity Price Amount Quantity Price
April 1 90 R10
2 40 R10 R400 50 R10
5 150 R11 R1 650 50 R10
150 R11
8 25 R10 R250 25 R10
150 R11
12 60 R12 R720 25 R10
150 R11
60 R12
15 25 R10 R250 120 R11
30 R11 R330 60 R12
20 20 R11 R220 100 R11
60 R12
1.2
The FIFO method offers two main advantages
Accurate inventory valuation which reflects current market prices, especially in times
of inflation, ensuring the inventory value is up to date. Aligns with actual flow of
goods which helps prevent holding outdated or perishable stock by selling older items
first, reducing the risk of inventory obsolescence.
1.1
FIFO Method
Purchases Issues and returns Balanc
Date Quantity Price Amount Quantity Price Amount Quantity Price
April 1 90 R10
2 40 R10 R400 50 R10
5 150 R11 R1 650 50 R10
150 R11
8 25 R10 R250 25 R10
150 R11
12 60 R12 R720 25 R10
150 R11
60 R12
15 25 R10 R250 120 R11
30 R11 R330 60 R12
20 20 R11 R220 100 R11
60 R12
1.2
The FIFO method offers two main advantages
Accurate inventory valuation which reflects current market prices, especially in times
of inflation, ensuring the inventory value is up to date. Aligns with actual flow of
goods which helps prevent holding outdated or perishable stock by selling older items
first, reducing the risk of inventory obsolescence.
