The stability of development and economic efficiency of functioning enterprise depends on the rational management of its assets, among which have a special place in current assets

Figure-1. Circulation of current assets²

Material-production stocks are tangible assets held for sale in the normal course of business and are in the process of producing products, performing work or providing services, or for draining administrative and socio-cultural functions.

Material-production stocksare the total cost of all component parts currently in stock that have not yet been used in work-in-process or finished goods production.

The cost of raw materials on hand as of the balance sheet date appears in the balance sheet as a current asset. Raw materials may be aggregated into a single inventory line item in the balance sheet that also includes the cost of work-in-process and finished goods inventory.

Raw materials may sometimes be declared obsolete, possibly because they are no longer used in company products, or because they have degraded while in storage, and so can no longer be used. If so, they are typically charged directly to the cost of goods sold, with an offsetting credit to the raw materials inventory account.

In accordance with the NAS №4 "Material production stocks ", the acquisition of material production to stocks keeping and the retiring material production stocks (including those released in production) is effected by one of the following methods:

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  at the identified cost of the corresponding unit;
  
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  by weighted average cost (AVECO);
  
• 
  at the prime cost of the first-time acquisition of inventory ( FIFO).
  
• 
  at the prime cost of the last-time acquisition of inventory ( LIFO)