AVCO Average cost, a method of inventory valuation which applies average prices to value closing inventory. 'Perpetual valuation' requires constant updating of the average when prices change; 'periodic valuation ' changes only at intervals, for example annually.
Bad debts Debts where there is no hope of collecting the amount due.
Cost of inventory Expenditure incurred on inventory to bring it to its present location and condition.
Current liability An amount due for payment within one year of the balance sheet date.
Debenture A name sometimes given to a loan repayable by a limited company.
Doubtful debts Debts where there is uncertainty as to whether the amount due will be paid, but the business has not given up hope of payment. I
FIFO First in, first out, a method of inventory valuation which assumes that the earliest inventory acquired is the first to be used, resulting in closing inventory being valued at most recent prices.
Good debts Debts which are expected to be paid in the normal course of business.
LIFO Last in, first out, a method of inventory valuation which assumes that the most recently acquired stock is the first to be used, resulting in closing inventory being valued at earliest prices. Not allowed under accounting standards.
Net realisable value Selling price of stock, after deducting all relevant costs to enable it to be sold.
Non-current liability An amount due for payment after more than one year of the balance sheet date.
Profit or loss on sale Another way of describing an over- or under-provision for depreciation over the life of
non-current asset a non-current asset.
Provision An amount set aside out of profits to reduce the value of an asset, due to factors such as uncertainty of value (provisi9n for doubtful debts).
Provision for bad debts Another term for a provision for doubtful debts.
Provision for bad Another term for a provision for doubtful debts.
and doubtful debts
Provision for An amount of profit set aside to cover the possibility of some debts becoming bad in the doubtful debts future.
Theoretical valuation Inventory valuation methods such as FIFO and LIFO which assume that inventory moves methods through the business in a particular way.
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