The impact of the assessment methods of the stock exits on an entity’s performance

Abstract

The choice of the assessment method for the stock exits affects both the value of the final stock and the trading margins. An unjustified choice results in manipulating the information about the stock value in the balance sheet as well as the one about the effect on the performance (the overvaluation or undervaluation of the result). The Romanian accounting referential clearly establishes the agreed methods. The use of one or the other is left to the management and it is influenced by the specific activity. In addition, the chosen method should be applied consistently for similar elements such as fungible assets and stocks from one year to another. Changing the method is permitted only if it is justified.