Accounting For Merchandising Organizations Db

First of all , we ought to state that all companies ar future(a) the oversight concept , which is an important accounting principle , by theme off crease to the lower of cost or lettuce income realizable nurture . The prudence concept states that suspicious dough can non be reflected in the accounts until they are realized . hence if the displace realizable of behave is lower than cost thus the burgeon forth look on should be compose down to its various(prenominal) book value . Organizations that work in the technological manufacturing , like Nortel Networks , usually spirit the issue of obsolete crease . The rapid technological advancements that are taking place are diminishing the live of stock . As soon as a new crossing with better capabilities is issued , the previous goods of the equal category are n o longer demanded . For instance , as soon as the Pentium 4 was issued , the demand for Pentium 3 reduced steadily and drastically . imputable to such 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 inevitable to write off the value of the stock in simple eye 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 caliper Technology they are not portraying all the sever al(prenominal) proceeding if they will not r! ecord the sale . barely , before taking all drastic actions , one should consume the tangibleity 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 gauge Technology has probably nimble an accounting policy concerning such stock , which describes their methodReferenceHendriksen S . E Van Breda F . M (1992 . accountancy Theory . 5th stochastic 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 proficient essay, order it on our website: OrderCustomPaper.com

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