As mentioned in the second para of Section , though it would be best to identify the cost of each specific unit of the material used/processed/sold by labeling it according to the particular lot in which was bought and so too for each unit of closing stock in order to make the most correct assessment of the value of the closing stock, such a solution is hardly implementable. In situations, as they happen, where there is a continuous flow of inventory, such a procedure is unthinkable to follow. Consequently, other methods of inventory valuation are in vogue and are discussed by several classifications based on whether actual cost information is available or not. By this criterion, following two groups of methods are available :
- Methods based on actual costs; and
- Methods not based on actual costs.
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