JAMB Principles Of Accounts · Section A

Stock Valuation

Study notes for Stock Valuation — part of the JAMB UTME Principles Of Accounts syllabus. 1 learning objectives with explanations and exam tips.

Objectives1
SubjectPrinciples Of Accounts
SectionA
Study Notes
Objective 1 of 1
income statement.

Stock valuation determines how much inventory costs appear on your income statement, affecting gross profit directly. When you sell goods, you need to know their cost price. Think of a Nigerian supermarket that bought rice at ₦5,000 per bag in January and ₦6,000 per bag in March. When they sell bags in April, which price do they use? That's stock valuation.

Three methods exist: FIFO (First In, First Out) assumes oldest stock sells first, LIFO (Last In, First Out) assumes newest stock sells first, and Average Cost uses the middle ground. Each method produces different cost of goods sold figures, changing your profit. During inflation, LIFO reduces profit while FIFO increases it.

Your choice affects both the income statement and balance sheet significantly.

💡 Exam tip: Always identify which valuation method a question uses before calculating, as different methods yield completely different gross profit answers.
Frequently Asked Questions
How many JAMB objectives are in Stock Valuation?
The JAMB Principles Of Accounts topic 'Stock Valuation' has 1 learning objectives you must master.
Does Stock Valuation appear in JAMB Principles Of Accounts?
Stock Valuation is part of the official JAMB Principles Of Accounts syllabus, so UTME questions can be drawn from it in any year.
How do I study Stock Valuation for JAMB?
Study each of the 1 objectives listed above. For each one, understand the concept, learn one worked example, and practise identifying the answer in a multiple-choice format.
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