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Business Technology and accounting process Assignment

   

Added on  2021-06-18

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Running head: BUSINESS TECHNOLOGY AND ACCOUNTING PROCESSBusiness technology and accounting processName of the studentName of the universityStudent IDAuthor note
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1BUSINESS TECHNOLOGY AND ACCOUNTING PROCESS Table of ContentsAnswer (a)..................................................................................................................................2Valuation of inventories.........................................................................................................2Answer (b)..................................................................................................................................2Audit report............................................................................................................................2Purpose of audit report...........................................................................................................3Reference....................................................................................................................................5
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2BUSINESS TECHNOLOGY AND ACCOUNTING PROCESS Answer (a)Valuation of inventoriesThe inventories of Domino’s Pizza are recorded at lower among the cost or the netrealisable value. The net realisable value states the estimated price of sales for the inventoriesreduced by all the estimated costs for completion and the costs (Shusheng pp. 541-544) Onthe other hand, the costs include appropriate portion of the variable and fixed overheadexpenses that are assigned to the inventories through the method that is most appropriate foreach specific inventory class where the major portion are valued on the basis of FIFO (first-in-first-out).In accounting context the term net realizable value is anticipated selling price of theinventory under normal business course that is reduced by expected cost of completion,transportation and disposal. However, these measurements are subjective and require variousjudgements for the determination. Further, it is noteworthy that the net realizable value is notused in case where the company use LIFO (last-in-last-out) method for inventory valuationand here the market value is used instead of the net realizable value (Haribhai-Pitamber andDhurup p. 81) The adjustment of lower among cost or net realizable value is taken up foreach inventory item or for the aggregate of the inventory. Once the inventory is written downto the net realizable value the loss shall be realized at the profit and loss account and theinventory account will be the new basis for the purpose of reporting and valuation. Theinventory value is examined on continuous basis to identify whether there is any signal ofobsolescence, spoilage, damage or demand reduction from the customers. Further, writingdown the value of inventories prevents the business to carry forward any loss to berecognized in the future period. Therefore, the use of the net realizable value is the way ofenforcing conservative recordation of the values of inventory assets (Sultana et al. pp. 72-87) Answer (b)Audit report The audit report is the written opinion issued by the auditor regarding the financialstatement of the company. The audit report is written in standard format as required by thegenerally accepted auditing standards (GAAS). As per the requirement of GAAS the auditorsallows or requires specific variations under the report based on the circumstances of audit
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