Consider the following scenario: As a newly hired Staff, you are responsible for analyzing the work papers for one of the clients of your organization. Your client is not clear about why you are asking for information on the following topics:
The response addresses the queries posted in 1761 words with references.
//In this paper, we will discuss some topics which were asked by the employee of an organization from his client to analyze his work papers in an efficient manner. The information will be collected on some of the topics. The client is not able to understand why this information is being collected by the employee of the other company; therefore, in this paper all these topics will be explained briefly to make the client understand the importance of these topics. //
All the topics are explained under the guidelines of Financial Accounting Standards Board (FASB) clearly. In this paper, we will discuss how FASB's generally accepted accounting standards and guidelines impact each topic, and how they help in improving the financial statements of the client's company.
Adjusting Lower Cost of Market Inventory on valuation
Values given to the inventory is a pivotal task because it represents a significant portion of the current assets. This information is gathered to identify that in which form the client's company is distributing value to its assets. After analyzing the company's financial health, it was identified that the company should adopt the method of Adjusting lower cost or market Inventory on valuation. The American Institute of Certified Public Accountants along with the Financial Accounting Standards Board issued in the guidelines that lowering of cost or market inventory on valuation should be implemented to all the inventories in the company to identify the exact value of the inventories. The information on this topic is collected because valuing inventory is a pivotal aspect, and it helps to give entire information of the company assets, and also impacts the profits of the company. Many a times, values of the inventories are decreased from their actual cost prices and at that time, the Accounting Board suggests the companies to adopt the Lower of Cost or Market method (LCM). This method includes the comparison between the inventory costs on hand and recent replacement costs of the stock. Then after identifying the value, the lower value will be used, which is different from the historical cost price of the asset. This method will help to identify any loss in the accounting period. This helps to formulate the correct financial statements of the company and to recognize the actual losses in their income statement. To identify LCM, net realizable value is also being considered. Net realizable value (NRV) will be found out by deducting the fees charged till the completion of sales from the selling price of inventories. This aspect helps in determining the real LCM of the company. This method is suggested to the client because according to the accountants, the value of assets should not be overstated; rather they should value the assets conservatively. Therefore, the ...
In this paper, we will discuss some topics which were asked by the employee of an organization from his client to analyze his work papers in an efficient manner. The information will be collected on some of the topics. The client is not able to understand why this information is being collected by the employee of the other company; therefore, in this paper all these topics will be explained briefly to make the client understand the importance of these topics. This solution is 1761 words with references.