ABSTRACT
This chapter explains the administration of fixed and current assets. It examines fixed assets - investment, value decrease, and disposal-, followed by current assets, especially inventory -stock of goods. The chapter discusses several methods: specific unit purchase price; first in first out; last in first out; and fixed purchase price. The cost of a fixed asset is its purchase price plus all other amounts paid to make the asset ready for its intended use. Depreciation is the allocation of a fixed asset’s cost to expenses over its useful life. Depreciation matches the expense against the period over which revenue is earned from using the asset to measure net income. Accounting principles such as consistency, disclosure, materiality and accounting conservatism affect inventories. The consistency principle states that businesses should use the same accounting methods from period to period. It helps stakeholders compare a company’s financial statements in consecutive periods.
