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A comparative analysis of the impact of inventory valuation methods on financial report statement in some manufacturing companies
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Abstract
This research work was conducted on with special reference to the impact inventoryvaluation methods has on financial report statements of manufacturing companies. For a longtime now the Accounting profession has not been able to come up with any particular technique or method to be used uniformly in valuing inventory. This research work examined if the method used was as a result ofthe prevailing economic circumstances. A survey research design was adopted for the study; data collected weregotten from both the primary and secondary sources. An infinite population of over 3000 was used and a finite population of 220. Three hypotheses were tested at 5 percent level of significance. Tables and percentages were employed to answer the questionnaires while the statistical regression coefficient analysis and Z- test were used to test the hypotheses. It was found amongst others that the prevailing economic parameter influences the decision of choice of inventory valuation method used. The Accounting professional bodies should try as much as possible to adopt a particular method of inventory valuation and the weighted average method was recommended as a method that can withstand any economic challenges TABLE OF CONTENTS TITLE PAGE…………………………………………….…………………i
APPROVAL PAGE………………………………………………………..ii
DEDICATION…………………………………………………..…………iii
ACKNOWLEDGMENTS…………………………………………….……iv
ABSTRACT………………………………………………………………...v
TABLE OF CONTENTS…………………………………………………..vi
CHAPTER ONE: INTRODUCTION
1.1 BACKGROUND OF STUDY………………………………………1
1.2 STATEMENT OF THE PROBLEM……………………………..…4
1.3 OBJECTIVES OF STUDY……………………………………….....5
1.4 RESEARCH QUESTIONS………………………………………….5
1.5 HYPOTHESES……………………………………………………...6
1.6 SIGNIFICANCE OF THE STUDY………………………………...7
1.7 SCOPE OF THE STUDY……………………………………..........8
1.8 LIMITATION OF THE STUDY.....................................................9
1.9 DEFINITION OF TERMS……………………………………..…..10
CHAPTER TWO:LITERATURE REVIEW
2.1 HISTORY PERSPECTIVE………………………………..………..13
2.2 THE PROBLEM OF INVENTORY MANAGEMENT………..…..14
2.3 INVENTORY VALUATION………………………………………..16
2.4 INVENTORY VALUATION METHODS…………………….……20
REFERENCE……….......................................................................37
9
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 INTRODUCTION.……………………………………….……………39
3.3 AREA OF THE STUDY……………………………….……………...40
3.4 POULATION OF THE STUDY………………………………………41
3.5 SAMPLE SIZE AND SAMPLINGTECHNIQUES……………….…41
3.6INSTRUMENT OF DATA COLLECTION……………………….…44
3.7 VALIDITY OF THE INSTRUMENT …….………………………....45
3.8 RELIABILITY OF INSTRUMENT ……………………………...…..45
3.9 METHOD OF DATA COLLECTION………………………………..46
3.10 METHOD OF DATA ANALYSIS…………………………………...46
CHAPTER FOUR:DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 DATA ANALYSIS………………………………..………………….....49
4.2 TESTING OF HYPOTHESES ……………………….………………...66
CHAPTER FIVE:SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION
5.1 SUMMARY OF FINDINGS…………………………………………..82
5.2 RECOMMENDATIONS……………………………………………....84
5.3 CONCLUSION…………………………………………………...........86
BIBLIOGRAPHY………………………………………………………88
APPENDIX A…………………………………………………...……...89 CHAPTER ONE 1.0 INTRODUCTION 1.1BACKGROUND OF THE STUDY Inventory valuation allows companies to provide a monetary value for items that make up their inventory (stock).
Inventories are usually the largest current asset of a business and are as important as funds (cash). It is a form of fund tied up in assets (current assets).
This research work was conducted on with special reference to the impact inventoryvaluation methods has on financial report statements of manufacturing companies. For a longtime now the Accounting profession has not been able to come up with any particular technique or method to be used uniformly in valuing inventory. This research work examined if the method used was as a result ofthe prevailing economic circumstances. A survey research design was adopted for the study; data collected weregotten from both the primary and secondary sources. An infinite population of over 3000 was used and a finite population of 220. Three hypotheses were tested at 5 percent level of significance. Tables and percentages were employed to answer the questionnaires while the statistical regression coefficient analysis and Z- test were used to test the hypotheses. It was found amongst others that the prevailing economic parameter influences the decision of choice of inventory valuation method used. The Accounting professional bodies should try as much as possible to adopt a particular method of inventory valuation and the weighted average method was recommended as a method that can withstand any economic challenges TABLE OF CONTENTS TITLE PAGE…………………………………………….…………………i
APPROVAL PAGE………………………………………………………..ii
DEDICATION…………………………………………………..…………iii
ACKNOWLEDGMENTS…………………………………………….……iv
ABSTRACT………………………………………………………………...v
TABLE OF CONTENTS…………………………………………………..vi
CHAPTER ONE: INTRODUCTION
1.1 BACKGROUND OF STUDY………………………………………1
1.2 STATEMENT OF THE PROBLEM……………………………..…4
1.3 OBJECTIVES OF STUDY……………………………………….....5
1.4 RESEARCH QUESTIONS………………………………………….5
1.5 HYPOTHESES……………………………………………………...6
1.6 SIGNIFICANCE OF THE STUDY………………………………...7
1.7 SCOPE OF THE STUDY……………………………………..........8
1.8 LIMITATION OF THE STUDY.....................................................9
1.9 DEFINITION OF TERMS……………………………………..…..10
CHAPTER TWO:LITERATURE REVIEW
2.1 HISTORY PERSPECTIVE………………………………..………..13
2.2 THE PROBLEM OF INVENTORY MANAGEMENT………..…..14
2.3 INVENTORY VALUATION………………………………………..16
2.4 INVENTORY VALUATION METHODS…………………….……20
REFERENCE……….......................................................................37
9
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 INTRODUCTION.……………………………………….……………39
3.3 AREA OF THE STUDY……………………………….……………...40
3.4 POULATION OF THE STUDY………………………………………41
3.5 SAMPLE SIZE AND SAMPLINGTECHNIQUES……………….…41
3.6INSTRUMENT OF DATA COLLECTION……………………….…44
3.7 VALIDITY OF THE INSTRUMENT …….………………………....45
3.8 RELIABILITY OF INSTRUMENT ……………………………...…..45
3.9 METHOD OF DATA COLLECTION………………………………..46
3.10 METHOD OF DATA ANALYSIS…………………………………...46
CHAPTER FOUR:DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 DATA ANALYSIS………………………………..………………….....49
4.2 TESTING OF HYPOTHESES ……………………….………………...66
CHAPTER FIVE:SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION
5.1 SUMMARY OF FINDINGS…………………………………………..82
5.2 RECOMMENDATIONS……………………………………………....84
5.3 CONCLUSION…………………………………………………...........86
BIBLIOGRAPHY………………………………………………………88
APPENDIX A…………………………………………………...……...89 CHAPTER ONE 1.0 INTRODUCTION 1.1BACKGROUND OF THE STUDY Inventory valuation allows companies to provide a monetary value for items that make up their inventory (stock).
Inventories are usually the largest current asset of a business and are as important as funds (cash). It is a form of fund tied up in assets (current assets).
This material content is developed to serve as a GUIDE for students to conduct academic research
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