Inventory Valuation Methods in TallyPrime

Inventory valuation determines the financial value assigned to closing stock. Two businesses with the same physical quantity can report different stock values if they use different valuation methods.

Common concepts

• FIFO assumes earlier costs are consumed first for valuation
• Average-cost methods use an average cost basis
• The selected method affects closing stock and reported gross profit

Policy first

Choose the method that matches the organisation accounting policy and reporting requirement rather than changing the method simply to alter a report result.

Change with care

A valuation-method change can materially affect comparative reports. Review the impact before altering a live company.