Reference no: EM132677866

You are an accountant working for Bob's Clothing Manufacturing Ltd. The year-end is September 30th and the CFO asked you to prepare for the year-end Cost of Goods Sold section in financial statements. You just reviewed the last year's income statement and learned that the company's Cost of Goods Sold follows the traditional calculation and presentation format:

Beginning Inventory XXX

+ Purchases XXX

-Ending Inventory (XXX)

=Cost of Goods Sold XXX

The CFO told you that the previous accountant did a sloppy job in the Cost of Goods Sold calculation and presentation. As a result, the income statement does not become a very useful information for investors, shareholders, and creditors to make decisions. Thus, the CFO asked you to make sure that you will follow the two fundamental qualities and foundational accounting principles with regards to performing the accounting for the Cost of Goods Sold.

Problem 1: To report back to the CFO, explain how you can apply the two fundamental qualities to accounting, calculation and presentation of the Cost of Goods Sold

Problem 2: To report back to the CFO, explain how you can apply "any two" foundational accounting principles to accounting, calculation and presentation of the Cost of Goods Sold.