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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Ethics and Inventory

An electronics store has a large number of computers that use outdated technology in its inventory. These computers are reported at their cost. Shortly after the December 31 year end, the store manager insists that the computers can be sold for well over their cost. But the store’s accountant has been told by the sales staff that it will be difficult to sell these computers for more than half of their inventory cost.

Required:

What are the consequences for the business of failing to recognize the decline in value?

To determine

Every individual settles on moral choices dependent on their qualities and points of view. The Ethical Lens Inventory (ELI) is an individual assessment device intended to enable understudies to comprehend the qualities that impact their decisions. It distinguishes how they organize values when settling on moral choices.

To choose

What are the consequences for the business of failing to recognize the decline in value?

Explanation

If the company failing to recognize the decline in the valuation of inventory then the direct effect on the cost of goods sold and also affect the gross margin amount.

Valuation of closing inventory is in direct relation with the profit amount. Many companies follow the rules of lower between the cost and market value...

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