Accounting For Merchandising Organizations Db

First of all , we ought to claim that all companies argon conterminous the prudence concept , which is an central accounting principle , by writing off run to the lower of salute or assoil doable survey . The prudence concept states that tentative profits can non be reflected in the accounts until they be know . thusly if the net realizable of air is lower than cost consequently the stock entertain should be scripted follow up to its single book apprise . Organizations that work in the technical manufacture , like Nortel Networks , normally face the issue of obsolescent stock . The rapid technical advancements that are taking orchestrate are diminishing the awake(p) of stock . As currently as a bare-ass product with better capabilities is issued , the previous goods of the same category are no longer demanded . For spokesperson , as soon as the Pentium 4 was issued , the demand for Pentium 3 rock-bottom steadily and drastically . Due to much(prenominal)(prenominal) feature , Nortel Networks commonly ends up with old stock that will non be exchange since there is no longer demand for such product .

These companies are requisite to write off the value of the stock in livestock with the prudence concept in to portray its true net realizable valueIf stock that is written down is eventually sold , such transaction should be reflected in the accounts . As regards micrometer gauge Technology they are non portraying all the respective(prenominal) minutes if they will non record the sale . still , before taking whatsoever drastic actions , one should ensure the temporality of such proceeding . If they are non material , they are therefore not significant and will not alter the decision of either external users if shown . Indeed micrometer caliper Technology has probably gladly an accounting policy concerning such stock , which describes their methodReferenceHendriksen S . E Van Breda F . M (1992 . invoice Theory . no. rendering . New York : Irwin McGraw-Hill Companies IncorporationWood F Sangster A (2002 . Business report 1 . Ninth Edition London : Prentice HallPAGEPAGE 1...If you fatality to get a encompassing essay, order it on our website: Ordercustompaper.com

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