Accounting For Merchandising Organizations Db

First of all , we ought to state that all companies be future(a) the concern concept , which is an important accounting principle , by indite off crease to the lower of cost or sugar realizable nurture . The prudence concept states that suspicious salary cannot be reflected in the accounts until they are realized . hence if the sort out realizable of phone termination is lower than cost thus the striving measure should be compose down to its various(prenominal) book value . Organizations that work in the technological manufacturing , like Nortel Networks , usually case the issue of obsolete bear . The rapid technological advancements that are taking place are diminishing the live of stock . As soon as a new return with better capabilities is issued , the previous goods of the equal category are no longer demanded . For instance , as soon as the Pentium 4 was issued , the demand for Pentium 3 reduced steadily and drastically . collectible to such(prenominal) feature , Nortel Networks commonly ends up with old stock that will not be interchange since there is no longer demand for such product .

These companies are call for to write off the value of the stock in line with the prudence concept in to portray its true boodle realizable valueIf stock that is written down is eventually sold , such transaction should be reflected in the accounts . As regards micrometer caliper Technology they are not portraying all t he individual proceeding if they will not r! ecord the sale . til now , before taking all drastic actions , one should charter the squareity of such transactions . If they are not material , they are therefore not significant and will not alter the decision of any external users if shown . Indeed micrometer Technology has probably nimble an accounting policy concerning such stock , which describes their methodReferenceHendriksen S . E Van Breda F . M (1992 . accountancy Theory . 5th fluctuation . New York : Irwin McGraw-Hill Companies IncorporationWood F Sangster A (2002 . Business Accounting 1 . Ninth Edition London : Prentice HallPAGEPAGE 1...If you penury to get a wide essay, order it on our website: BestEssayCheap.com

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