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Ethic case (Example)

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Ethics Case #3 During 2014 Crop-Paper-Scissors a craft store began operations and chose to use the FIFO inventory costing method. After creating their financial statements for 2014 the company realized that it would prefer to use the LIFO inventory costing method instead. So Crop-Paper-Scissors switched to the LIFO method in 2015. Due to a change in the economy the company realized that it would in fact be better for them to use the FIFO method. So in 2016 they switch back to FIFO. After analyzing the swing in the numbers over the past few years they decide to smooth things out a bit by trying average costing in 2017. (Horngren’s Financial & Managerial Accounting: The Financial Chapters 4e Pearson Publishing p. 426) 1. What impact(s) will these actions have on the company’s financial statements? Be sure to discuss the balance sheet and the income statement separately and be specific about This will have an impact on the assets and cash flow. The change would affect the performance rations utilized in rating agencies and banks that determine profitability liquidity and stability of the company. Compensation committee that designs compensation structures would have to realign this. Additionally the inventory valuation change means that executives would be rewarded based on their performance. 5. As a personal friend what advice would you give to the accountant who works for Crop-Paper-Scissors? LIFO method tends to increase the bookkeeping record since earlier inventory units are usually kept in store for several years. IRS regulations does not allow the use of LIFO method since it results in lower profits hence lower tax to be taxed on the Company. The decision to use the inventory valuation accounting methods has many implications to the Company and Accountants should use professional judgment in choosing the inventory methods of valuation [...]

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File Ethics Case 3 - Inventory.rtf (56.57 KB) Please follow these instructions: save the attached file to your computer or removable storage device as "yourlastname_ethics3"; you will need to use the "save as" command to choose the desired location and new file name open the file and add your name to the top left corner of each page (please do this by using the header provided) answer each question by typing your response within the space provided be sure to save your work often!! when you have completed the case, be sure to save your work one last time to ensure that the file you submit is complete return to Bb and submit your file for grading (please review the instructions within the "how do I submit my work" folder if necessary)

Subject Area: Accounting

Document Type: Personal Statement

This project has already been completed by one of the Studybay experts. The client rated this project:

Project's rating is 5/5

Price $25

Words 550

Pages 2

Completed in 3 days

Expert shanaya

Client Review

great work thanks a lot

Positive
03.22.2018

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Subject of the project is Accounting   Type of the project is Personal Statement

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