Reference no: EM132170271
1) Chapter 9 of the online text describes the production cycle. One component of this cycle is inventory. Inventory is usually the largest item on a manufacturing company's balance sheet.
Many companies will track their inventory on a periodic or perpetual system. A periodic system is one in which the company cannot really look up a part number and determine exactly how much they have on hand. A perpetual inventory is continuously updated with each transaction that occurs. The external auditor will often verify the inventory quantities at year end.
They will make a selection of items and make sure that their count matches the count in the computer. Has anyone ever participated in counting inventory at a workplace?
2) Chapter 9 of the online text discusses how companies value their Inventory. What is meant by the "lower-of-cost-or-market" valuation method? Why is this important to a company?
3) Chapter 10 discusses the concept of a gain or loss on an asset. I want to make sure I explain this in an easy way. If you have a piece of machinery that you purchased for $5,000 20 years ago, it is most likely fully depreciated.
By this, I mean that the asset had a life of say 7 years and the 7-year period has run out and there is no book value (cost - accumulated depreciation). If the company sells the item for $1,000 they would have to record a journal entry. It would look like this:
Cash $1,000
Accumulated Depreciation $5,000
Machinery $5,000
Gain on Sale of Asset $1,000
4) Chapter 12 of the online text discusses Intangible Assets. What is the difference between a patent, trademark and copyright? How can having these items protect a company?
5) Chapter 12 of the online text discusses the concept of intangible assets. A good example would be the patents and trademarks at the company I work for. Each new design for a golf club has a patent filed. This protects the company from other people using the idea and/or name.
A recent example is the company Apple. They decided to name their social music networking site Ping, which is the same name as the golf clubs that the company I work for produces. They realized that we owned the trademark and they approached the company and the companies were able to reach an agreement. Here is a link to an article discussing how the site closed after it did not take off as they expected.
6) Chapter 10 I wanted to discuss a little more about how property, plant and equipment might be listed on a company's actual trial balance. As an example, the trial balance at my workplace lists the accounts as follows:
Land
Buildings and Improvements
Machinery
Office Equipment
Computer Equipment
Software
Vehicles
These are common classifications that are used by most companies to track their assets. Can anyone think of a different classification or a unique item from their workplace or another workplace?