The following is an excerpt from a conversation between Paula Marlo, the warehouse manager for Musick Foods Wholesale Co., and its accountant, Mike Hayes. Musick Foods operates a large regional warehouse that supplies produce and other grocery products to grocery stores in smaller communities.
Paula: Mike, can you explain what’s going on here with these monthly statements?
Mike: Sure, Paula. How can I help you?
Paula: I don’t understand this last-in, first-out inventory procedure. It just doesn’t make sense.
Mike: Well, what it means is that we assume that the last goods we receive are the first ones sold. So the inventory consists of the items we purchased first.
Paula: Yes, but that’s my problem. It doesn’t work that way! We always distribute the oldest produce first. Some of that produce is perishable! We can’t keep any of it very long or it’ll spoil.
Mike: Paula, you don’t understand. We only assume that the products we distribute are the last ones received. We don’t actually have to distribute the goods in this way.
Paula: I always thought that accounting was supposed to show what really happened. It all sounds like “make believe” to me! Why not report what really happens?
Respond to Paula’s concerns.
Financial And Managerial Accounting
Financial & Managerial Accounting
Accounting Information Systems
Corporate Financial Accounting
Essentials of Business Communication (MindTap Course List)
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Fundamentals of Financial Management (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Brief Principles of Macroeconomics (MindTap Course List)
Management, Loose-Leaf Version
Principles of Economics (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Foundations of Business (MindTap Course List)
College Accounting, Chapters 1-27
Contemporary Marketing
Essentials of Economics (MindTap Course List)
Managerial Accounting: The Cornerstone of Business Decision-Making
Intermediate Accounting: Reporting And Analysis
Accounting Information Systems
College Accounting (Book Only): A Career Approach
Financial & Managerial Accounting
MKTG 12:STUDENT ED.-TEXT
Accounting (Text Only)
College Accounting (Book Only): A Career Approach
Fundamentals of Financial Management (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Exploring Economics
Statistics for Business & Economics, Revised (MindTap Course List)
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Principles of Macroeconomics (MindTap Course List)
Pkg Acc Infor Systems MS VISIO CD
Survey of Accounting (Accounting I)
Corporate Financial Accounting
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Purchasing and Supply Chain Management
Macroeconomics
Cornerstones of Cost Management (Cornerstones Series)
Practical Management Science
Microeconomics
Economics For Today
Economics (MindTap Course List)
Cornerstones of Financial Accounting
Managerial Accounting
MACROECONOMICS FOR TODAY
Understanding Management (MindTap Course List)
Macroeconomics: Private and Public Choice (MindTap Course List)
Principles of Microeconomics
Economics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)