A merchandizing company would add several account that would be absent in a service company. When using perpetual inventory are net sales account,cost of goods sold, sales return, allowances, freight in sales discount account, inventory short or over, merchandizing inventory cost of good and sales return. merchandizing inventory cost of good are the current asset which report the cost of a distributor’s, wholesaler’s and retailer’s goods purchased to be resold which have not yet been as of the balance sheet date, it is an asset as long as they are not sold.
An allowance is granted to the customer who had purchased goods with pricing error or other problem not involving the return goods. If the customer purchased on credit, sales allowance will involve a debit to sales allowance and credit to accounts receivable. Therefore sales allowances are assets and purchase allowances are liability.
Net sales are debited and are defined as total sales minus return inward + sales discount + sales allowances.
Gross profits are net sales minus the cost of goods sold.
Freight in sales discounts are a form of contra revenue account a company where the company offer discount is an expense.
Freight in sales return is the revenue a company gain as a result of sales .it’s contra revenue.
Inventory short or over is an income statement account in which a shortage or overages in cash are recorded.
When using LIFO there will be higher cost of inventor, low net income, low profit margin, low earning per share, low tax payable and therefore a tax advantage. This will transit into low current ration since it is given as current asset/current liabilities but the current are high while profit margin will be low as it is given as net profit after tax /sales. However it is reverse for FIFO and the golf away sport company changing into FIFO will translate into higher current ration and the profit margin will rise. For FIFO the following will be the result lower cost of inventory, lower cost of goods sold, higher net income, higher profit margin, higher earnings per share, higher taxes payable and no tax advantages.
The chosen is the college library where the internal control mechanism used was found to be as follows. Firstly, it was the use of CCTV surveillance system to check monitor all the activities going on in inside the library to make sure there are no irregularities. Secondly, is the use of authentication services to ensure no person get into the system without the user password to access the library resources. Thirdly is employing internal auditing to ensure that no fraudulent activities occur in the records. Fourthly is the use of internal security personnel to ensure that no employee or student come out of the library with materials they are not allowed to come out with. Finally, the library employ’s a single manager who is accountable for any losses that that occurs within the library.
Lowering the doubtful will cause the income statement understate expenses causing net income to be overstated while on the balance sheet, lowering the estimate of doubtful accounts would increase asses since the estimate for doubtful accounts is a contra asset account. This directive is definitely unethical especially on the manager who gives the order to the accountant. To make it ethical there should be at least a third party to witness the changes made by the accountant. In this situation the manager can also be kept in check by including limited access, periodic independent verification, separation of duties and sound personnel procedures.
The bill contains responsibilities of public corporation is board of directors, adds criminal penalties for misconduct and required the security and exchange commission to create regularities to define how public corporations are to comply with the law (Fleet,2013). An example of the company that was involved in the sox, 2002 is world.com. This company traded in NASDAQ (pre-bankruptcy) and MCIP (post bankruptcy). It was the 2nd largest telecommunication company after A&TT company. Today it is referred as Verizon Enterprise solutions. The scandal was achieved in two ways firstly booking line costs as capital expenditure on the balance sheet instead of expenses and secondly inflating revenues with bogus accounting entries from corporate unallocated revenue accounts. They had inflated the total company assets by $11 billion. Then the C.E.O. was charged for embezzlement and all workers involved in the scandal were sucked.
Coursehero.com. “1. How Does Golf Depot’s Use Of FIFO Improve Its Net Profit”. N.p., 2016. Web. 3 Mar. 2016.
Fleet, Wendy. “Why Do Students Choose Not To Follow All Instructions When Completing Assessment Tasks?” Accounting Education 22.3 (2013): 299-301. Web.