Accounting For Merchandising Organizations Db

First of all , we ought to differentiate that all companies argon neighboring the prudence concept , which is an significant accounting principle , by writing off conk out to the lower of court or gain realizable appreciate . The prudence concept states that provisionary profits can non be reflected in the accounts until they are realised . thusly if the net realizable of dribble is lower than cost consequently the stock appreciate should be scripted belt down to its single book entertain . Organizations that work in the expert manufacture , like Nortel Networks , usually face the issue of rare stock . The rapid technological advancements that are taking position are diminishing the pull round of stock . As briefly as a refreshed product with better capabilities is issued , the preceding(prenominal) goods of the same category are no longer demanded . For typesetters case , as soon as the Pentium 4 was issued , the demand for Pentium 3 rock-bottom steadily and drastically . Due to much(prenominal)(prenominal)(prenominal) feature , Nortel Networks ordinarily ends up with old stock that will non be change since there is no longer demand for such product .

These companies are undeniable to write off the observe of the stock in depict 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 micron Technology they are non portraying all the respective(prenominal) minutes if they will non record the sale . provided , before taking whatever drastic actions , one should consume the substantiality of such transactions . If they are non material , they are therefore not significant and will not alter the decision of both external users if shown . Indeed micron Technology has probably lief an accounting policy concerning such stock , which describes their methodReferenceHendriksen S . E Van Breda F . M (1992 . invoice Theory . ordinal pas seul . New York : Irwin McGraw-Hill Companies IncorporationWood F Sangster A (2002 . Business story 1 . Ninth Edition London : Prentice HallPAGEPAGE 1...If you mite to get a full moon essay, order it on our website: Ordercustompaper.com

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