Acc 552 Week 4 Paper

As focusing on each of the five management assertions for the inventory account, we discovered that there are some risky areas that indicate the need for further attention during the audit. First of all, for existence or occurrence, all items in the inventory account must physically exist and be available for sale. Thus, the auditors should physically count finished goods, copper rod, and plastic inventories, and determine actual increase of inventories at year end. Also, they should select items from the inventory ledger and locate them and reconcile the quantity. Second, for completeness, the auditors should make sure that all existing inventories have been recorded completely , go around the warehouse and ensure all the inventories are recorded in the inventory ledger. Third, for valuation or allocation, the auditors should make sure that Laramie Wire manufacturing sticks with one valuation method(For inventory items, valuation is based on the lower of cost or market value, with several alternative methods for calculating cost), find out if there is any scrap inventory that needs to be recorded and written off ,and ask about obsolescence items. Fourth, for rights and obligations, the auditor should ask them if there is any consigned inventory at their warehouse. If there is, those inventories should not be recorded in the company's inventory ledger. Finally, for presentation and disclosure, the auditors should review the company's financial

We as business owners, management and or in a role of authority must set, address and comply with a solid foundation of ethics. “A code of conduct is the single most important element of your ethics and compliance program. It sets the tone and direction for the entire function. Often, the code is a standalone document, ideally only a few pages in length. It introduces the concept of ethics and compliance and provides an overview of what you mean when you talk about ethical business conduct.”

The process requires Peyton Approved to discover how much inventory is sold and what the cost of goods will result in. The process requires the business to review three forms of merchandise inventory to determine which summary benefits the business’s operational behavior. One will discover when assuming that first inventory purchased by the store is the first to be sold, it is determined that the FIFO method displays the best financial outcome for the business. During the process of updating journal entries, one must enter the information proved appropriately into the T-accounts to add the balance under each record. Once the T-accounts for transactions and adjusted transactions are balanced, the next step is to enter the information provided on the balance sheet. The balance sheet will list Peyton Approved assets, liabilities and stockholders equity after added during the T-account process (Nobles, 2014). Once the balance sheet is completed the income statement, statement of retained earnings, and closing entries can be filled with the information proved. This will give the business a full review from journal entry to closing entries of the business for the six month accounting

After reading Chapter 6 of the textbook and the materials I found that I was struggling to understand the material more than usual. Before reading this chapter I had a slight idea of how much effort went into keeping track of the costs and inventory. The most that I knew was that you had to keep track of it, I didn’t know that there are different ways to keep track of those costs. After reading more into the different ways to keep track of inventory I found that the one that stuck out most to me and was the one that I spent the most time trying to understand was the LIFO (Last In First Out).

You use a perpetual inventory system and value the inventory using FIFO. Prior to making adjusting year-end entries you valued the inventory at the lower-of-cost or-market. Justify why you valued the inventory at lower-of-cost or-market.

45. (LO1) ATW corporation currently uses the FIFO method of accounting for its inventory for book and tax

There are four accepted inventory methods: Specific Unit Cost, Average Cost, FIFO, and LIFO. Unique inventory items are recorded in inventory by the cost of that unit or specific unit cost. Non-unique items use one of the other 3 methods. The average-cost method is: average cost = cost of goods available / number of units available. The first-in, first-out (FIFO) method assigns the first costs into inventory to the first cost of goods sold. The last-in, first-out (LIFO) method assigns the last costs into inventory to the first cost of goods sold. Since inventory costs can vary, companies may choose an inventory method based on tax advantages. When prices are falling, FIFO will have the lowest taxable income. When prices are rising, LIFO has the lowest taxable

e LIFO cost flow method of inventory costing (Martin, J. R.). From Harry Davis’ article, a search for alternatives of the base stock method started, because of the base stock method was no longer apply to the income tax purposes, the acceptance of LIFO by professional groups represents the last part its early development. If the idea of LIFO was not being permitted, there will be a huge loss on the development of the accounting tools. Nobody will know that there is a method of inventory management could help company for the tax purpose. According to Steven Bragg’s article, nowadays, the LIFO method is not applying for IFRS. Although IRS allows the LIFO method, but it must apply for all parts of the financial reports (July, 2017). The Treasury claimed that is hard for them to management and regulate the information if LIFO were applied to a large group of people that using LIFO for the tax purposes. Congress compensated some industries with LIFO, because some of industries was unsuccessful in getting the internal revenue service to recognize of their business practices. The hearings for the 1938 Revenue Act indicate that LIFO was considered appropriate only under the conditions listed

The second types of inventory methods to value its inventory that CVS uses is the most common one used for most business the First-In, First-Out (FIFO). First-In, First-Out (FIFO) is defined as the first inventories bought are the first ones to be sold. CVS only uses FIFO for Some Retail Pharmacy and Rest of Business (Front store). CVS utilizes this method because; the fresher products have to be out the door first. Also, FIFO is an easier method than Weighted Average Cost. And most importantly it may over inflate cost because the last products bought and out the door first are usually the most expensive products.

The Last in first out (LIFO) liquidation Inventory valuation method was changed as Inventory level in1984, 1983 and 1984 was decreased by Harnischfeger. By adopting this process, inventory that was purchased at lower cost in previous years was sold at higher prices.

My inventory control procedures provided both increased revenues and cost savings. Quite simply, I ordered adequate levels of products which were in high demand, I was able to better meet customers’ needs, and my revenues increased. The cost savings I experienced as a result of my inventory control procedures were a bit more complex. First, in establishing a routine schedule for ordering, I was able to reap the benefits of lower shipping costs. Because I had a routine schedule, I could

If the sales volume is increased, the inventory may change to cash. Our company may then invest in Asia-Pacific (AP) plant and decrease the production in North America (NA) region. It is because the cost of production in AP is lower than in NA and production reject rate is also low in AP.

To account for inventory, the company uses, first in first out policy. Property plant and equipment are recorded at cost less the accumulated depreciation amount. Depreciation is charged on straight line method

This gives the illusion of lower cost of goods sold (and thus higher profits) but it is, in fact, just a temporary capitalizing of the fixed manufacturing costs due to inventory build up.

Inventory is usually never the direct responsibility of the finance department. They have more of an oversight or policing responsibility for the management of inventory. Inventory is more the responsibility of functional areas of manufacturing or operations. The executives in those areas are the ones who set the levels and how the inventory is to be managed. From there, is the levels get too high, the finance department steps in and calls attention to the problem and points out that the problem might be that it could be managed more efficiently.