Going back to our bicycle example; assume that the bicycles purchased in the month had cost £230 each instead of the £200 that the ones in stock had cost. Required What price would we use to value the 45 bicycles sold in the month and the 25 left in hand at the end of the month?

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Stock in hand at start 20 at 200 Add purchases in period 50 at 230 4.000 11 500 Available for sale 70 Stock at month end Cost of goods sold a a P a. a. P P 25 at 45 at Unless each bievele has been identified, there is no right answer. An assumption has to be made. Accountants would choose one standard approach from a number of possible approaches. We look at three common approaches below. However having chosen to use a particular approach in one period, the same approach must be adopted in following periods for consistency. If this were not so the results from period to period could not be compared.