Accounting For Merchandising Organizations Db

First of all , we ought to state that all companies are future(a) the prudence concept , which is an important accounting principle , by authorship off crease to the lower of cost or kale realizable nurture . The prudence concept states that suspicious benefit cannot be reflected in the accounts until they are realized . hence if the illuminate realizable of shopworn is lower than cost thus the banknoteage repute should be compose down to its various(prenominal) book value . Organizations that work in the technological manufacturing , like Nortel Networks , usually brass instrument the issue of obsolete store . The rapid technological advancements that are taking place are diminishing the live of stock . As soon as a new increase with better capabilities is issued , the previous goods of the equal categor y are no longer demanded . For instance , as soon as the Pentium 4 was issued , the demand for Pentium 3 reduced steadily and drastically . callable to much(prenominal) feature , Nortel Networks commonly ends up with old stock that will not be exchange 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 clear up 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 not portr aying all the individual proceeding if they! will not record the sale . all the same , before taking all drastic actions , one should carry the satisfyingity 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 micron Technology has probably nimble an accounting policy concerning such stock , which describes their methodReferenceHendriksen S . E Van Breda F . M (1992 . accountancy Theory . 5th chance variable . 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 full-of-the-moon essay, order it on our website: BestEssayCheap.com

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