Accounting for inventories is a practice that determines success of the business to a great extent. Good practices of inventory costing imply that a business might perform well. It is important to value inventories at different accounting periods to ensure that stock is not stolen by employees. As such, good accounting practices for inventories ensure that the business does not suffer shortages since all records of stock are available.
There are different methods that can be used for inventory costs. These methods vary with different situations and the kind of business. Being the person in charge of inventories in fast food restaurant, I need to choose a method that can work well for food products. For this reason, I would choose the first in, first out method. This method holds that the older stock will be used before inventories that have been acquired recently.
This method suits the restaurant since food products are mostly perishable. For this reason, food products should be used in the order in which they were bought to ensure that the available stock is fresh. This method also reduces theft of stock, since employees do not get enough time to steal the stock as they are not kept for long durations.
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Other types of businesses adopt different methods of accounting for inventories. For example, shoe retailers should use the average cost method since they sell homogeneous products that are non-perishable. Physicians should use the last in out method since this ensures that they utilize the most recent technologies. A food vending track should use the first in first out method since food products are perishable. These methods reduce the risk of waste and losses in the respective businesses where they are applied.
Therefore, there are different inventory costing methods applied in different businesses based on the kind of businesses. Companies use methods that best fit the nature of their stock, as well as their operations.