inventaariomenetelmän

Inventaariomenetelmä, also known as the inventory method, is a fundamental accounting technique used to determine the cost of goods sold and the value of remaining inventory. It is a crucial component of financial reporting for businesses that sell physical products. There are two primary types of inventory valuation methods: the periodic inventory system and the perpetual inventory system.

Under the periodic inventory system, inventory is physically counted at the end of an accounting period. The cost of goods sold is then calculated by subtracting the ending inventory value from the total cost of goods available for sale. This method is simpler to implement but provides less frequent updates on inventory levels and costs.

The perpetual inventory system, in contrast, continuously tracks inventory levels and costs as each transaction occurs. Purchases and sales are recorded in real-time, allowing for an up-to-date understanding of inventory on hand and the cost of goods sold at any given moment. This method typically requires more sophisticated accounting software.

Within both systems, specific cost flow assumptions are used to assign costs to inventory. The most common include First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and Weighted-Average Cost. FIFO assumes that the oldest inventory items are sold first, while LIFO assumes the newest items are sold first. The weighted-average method calculates an average cost for all inventory items. The choice of method can significantly impact reported profits and inventory values, especially during periods of changing prices. Different accounting standards may permit or restrict the use of certain methods.