Preview

Weekly Reflection

Satisfactory Essays
Open Document
Open Document
461 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Weekly Reflection
Weekly Reflection
ACC 422

Weekly Reflection
Week three was highlighted by the discussion of fixed assets and the use of accounting for depreciation of those assets. Businesses utilize depreciation of their fixed assets to take advantage of the tax breaks that they receive. The cost of depreciation of assets lowers the taxable income of a company and in turn allows either a higher refund or less owed in taxes. Another option that is available is the use of accelerated depreciation. This option allows for companies to accelerate the depreciation of assets to a current year's return to gain a higher tax break. The use of this tool is usually implemented in times of economic turmoil to stimulate the economy.
Inventory is one of the most prominent items on the balance sheet. The inventory position shows how methodical management is with stockholder assets and how certain they are in the businesses' forthcoming sales. In the majority of circumstances the inventory would be summarized at its expense; nevertheless, inventory could be decreased lower than cost when there is confirmation that the assessment of the merchandise, when marketed, would be below the cost. This may develop on account of extinction, decline, or relevant price adjustments. The purpose for why inventory is palpable to an income statement is that inventory figures are utilized in the calculation of the cost acquired to execute the commodities exchanged throughout the duration.
Inventory valuation is important to the presentation of both the balance sheet and the income statement because its impact extends beyond just its total value. Not only is the value of the inventory represented as a current asset on the balance sheet, but also the value of the goods sold are shown as an expense on the income statement. Therefore, it is extremely important that the valuation method chosen for inventory is appropriate, of which there are three main methods: LIFO, FIFO, and AVCO. If inventory is not

You May Also Find These Documents Helpful

  • Good Essays

    Since the profits shown in this method are lower, the net profit figure over a period of 28 years will be a conservative and low figure. If the FIFO method of inventory valuation is adopted, the cost of goods sold will be matched against costs at a lower level and thus the profit shown will increase drastically at the current rate. Since the company does not have an alternative to address the pressure from the directors and to maintain its earnings at a time of rising costs, the FIFO method of inventory valuation will help increase the net profit shown in the financial…

    • 850 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    b) ASC 926-330-35-1: This references how an entity can evaluate their inventory at the end of a period. Manly to do with products help for sale, meaning items that are in inventory and that your business is going to be selling to clients. The inventory can be evaluated at the net realizable value, meaning the sale of the product minus the cost associated with it.…

    • 312 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    IFRS vs ASPE

    • 487 Words
    • 2 Pages

    Inventory is defined as “assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services”. The cost of inventory is measured at the lower of cost and net realizable value. The IFRS accounting for inventory is generally converged with ASPE. The only difference between IFRES and ASPE in the accounting for inventory is with borrowing costs. Since some inventory products require significant manufacturing time (qualifying assets), a manufacturer will finance its operating costs by borrowing money. Under ASPE we can choose to capitalize borrowing costs relating to inventory that takes substantial time to get it ready for sale. In comparison with IFRS, borrowing costs associated with qualifying assets are capitalized.…

    • 487 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Week 3 Reflection

    • 351 Words
    • 2 Pages

    Identify an organization not previously selected and recommend methods to reduce costs. What effects do technologies have on costs? What are some lower-cost sources the organization can utilize to reduce costs? What considerations might cause a profit-maximizing firm to decide to forgo using lower-cost sources?…

    • 351 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Week 2 Reflection

    • 743 Words
    • 3 Pages

    1. Color is the most dominant over line in the five Impressionist paintings. The line does not seem to be important to the painter.…

    • 743 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Week 1 Reflection

    • 443 Words
    • 2 Pages

    This week we went over a quick overview of the basic understanding of what consist of the economy. The economy is driven by three things economy, social and political factors. All of these factors create a melodic relationship which in the end drives the economy.…

    • 443 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Accounting Standards

    • 827 Words
    • 4 Pages

    Inventory is an asset that is intended for sale or goods that are produced for sale. To determine the value of inventory to be reflected in the balance sheet, purchases are added to the beginning inventory and then cost of goods sold are subtracted.…

    • 827 Words
    • 4 Pages
    Good Essays
  • Good Essays

    The past two decades of tax law have created more opportunities than ever for business owners to defer tax amounts. Today, it is common practice for businesses to rely on accelerated depreciation to help lessen the burden of taxes imposed on corporate profits, and also shift their income to ethically maximize financial growth. For the purpose of accounting, accelerated depreciation intends to reflect how much of the corporation’s asset is being used up each year, assuming that the highest rate of productivity is found in the first few years. This type of tax allowance qualifies as an initial allowance in the first year, or can be spread out over several years (“Accelerated Depreciation” 2009).…

    • 689 Words
    • 3 Pages
    Good Essays
  • Good Essays

    NOTES ABOUT VALUING INVENTORY, in the notes of significant accounting policies in the paragraph of inventories they states that inventories are measured at the lower of cost and net releasable…

    • 1215 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    Inventory Valuation

    • 1852 Words
    • 8 Pages

    Retailers define inventory as intended sellable assets consisting of goods that are available for resale to customers. Manufacturers also maintain three components of inventory. These include “finished goods” which are goods that have been completed and are awaiting sales. Manufacturers may also have “work in process inventory” made up of goods being manufactured but not yet completed. The third category of inventory is “raw materials,” consisting of goods that are to be used in producing products. Overall, inventory should include all costs that are both ordinary and necessary to put the goods in place and in condition for their resale. For many companies, what they have in inventory represents a major portion of assets and therefore makes up an important part of the balance sheet. It is therefore crucial for investors to understand how inventory is valued.…

    • 1852 Words
    • 8 Pages
    Powerful Essays
  • Good Essays

    It is little wonder that business experts commonly cite inventory management as a vital element that can spell the difference between success and failure in today 's keenly competitive business world; inventory can be nuisance, necessity or convenience. Organizations place stock in a subsidiary rather than a central position, but still an important element in operational effectiveness and often appear on the balance sheet as biggest current assets taking up a lot of money. Inventory management function is carried with procurement, supply chain, logistics and finance beside marketing department.…

    • 653 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    TuteCh5Birt4th

    • 430 Words
    • 3 Pages

    the inventory on hand at the end of the period affects the calculation of the cost of sales in the income statement (cost of sales = opening inventory + purchases – closing inventory).…

    • 430 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Acc Chap 9

    • 3869 Words
    • 16 Pages

    The primary basis of accounting for inventories is cost. A departure from the cost basis of pricing the inventory is required where there is evidence that when the goods are sold in the ordinary course of business their…

    • 3869 Words
    • 16 Pages
    Good Essays
  • Satisfactory Essays

    Week 5 Reflection

    • 379 Words
    • 2 Pages

    Team B will reflect on why it is important for management as well as investors and creditors to understand the current and long-term liabilities. What makes it important to disclose contingencies as well as how do operating and capital leases relate to liabilities.…

    • 379 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    A primary issue in accounting for inventories is the determination of the value at which inventories are carried in the financial statements until the related revenues are recognized. This Statement deals with the determination of such value, including the ascertainment of cost of inventories and any write-down thereof to net realizable value.…

    • 2267 Words
    • 10 Pages
    Powerful Essays