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A Stores is a virtual money that can be
encashed. However, this money needs to be properly
counted or accounted for. Stock accounting is thus
a systematic way of assessing the money value of
the items lying in stores as also the items under
transaction through stores.
Transactions , in terms of receipts and issues are
a regular feature in any stores and therefore
Stock accounting process , in most of the cases,
concentrates only on the stock in hand, lying in
Stores.
The most popular methods of accounting are, FIFO
i.e First In First Out and LIFO, Last In
First Out.
FIFO and LIFO Methods as accounting
techniques are used in managing inventory (Stock
lying in Stores for future use) and
financial matters involving the amount of money a
company has tied up within inventory of produced
goods, raw materials, parts, components, or feed
stocks. These methods are used to manage
assumptions of cost flows related to inventory,
stock repurchases (if purchased at different
prices), and various other accounting purposes.
FIFO standing for first-in, first-out, implies
that the oldest inventory items are recorded as
sold first but do not necessarily mean that the
exact oldest physical object has been tracked and
sold.
LIFO stands for last-in, first-out, meaning that
the most recently produced items are recorded as
sold first. Since the 1970s, some U.S. companies
shifted towards the use of LIFO, which reduces
their income taxes in times of inflation, but with
International Financial Reporting Standards
banning the use of LIFO, more companies have gone
back to FIFO. LIFO is only used in Japan and the
U.S.
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