Inventory Assignment Example | Topics and Well Written Essays - 250 words

Inventory - Assignment Example Both the goods and invoice were received in early 19X3, with the invoice being re ­corded at that time. (b) The above errors had an overall effect of overstating the balance of owner’s equity as at December 31, 19X2. In the first error, it is assumed that only the purchases journal was wrongly entered. The effect of understating cost is to an understatement of cost of goods sold, hence overstating the net income, which is part of owner’s equity. The ownership of goods purchased on F.O.B terms revert to the buyer immediately the seller delivers them to the port of delivery. It is therefore assumed that the goods were already on transit by the end of business on December 31, 19X2. Therefore the exclusion of this transaction had no effect on the cost of goods sold since it was neither included as purchases nor closing inventory. It will only affect the value of inventory in the balance sheet with no effect and accounts payable or cash. There is no effect on owner’s equity. Excluding $3,000 from the closing inventory in 19X1 means that the cost of goods sold was understated with the ending result being an overstatement of net income, hence owner’s equity. Since the amount was not included in 19X2, it means that sales revenue was recognized on these goods with no corresponding

Quality and Service Improvements Lead to Enhanced Company Revenues and Essay

Quality and Service Improvements Lead to Enhanced Company Revenues and Higher Margins - Essay Example Do quality and service improvements related efforts add cost to the production operations, or does it cut down wastage, improve product appeal and thus generate greater revenues Disjointed quality related efforts add expenses and do not contribute extra profits to the bottom line. Where as sincere efforts with active participation of all layers of an enterprise can rejuvenate and reinvigorate the entire organization and provide commendable competitive advantage. Having said all this we need to know what exactly quality is as identification of quality would result in its improvement and thus increase revenues. Literally quality originates from the Latin word 'qualis' which can be translated as 'such as the thing really is'. Quality has various meanings and each has a depth within itself. Before starting of with how quality and service results in enhanced profits we will identify what actually quality is and how various gurus have identified quality as. Quality itself has been defined as the ongoing process of building and sustaining relationships by assessing, anticipating, and fulfilling stated and implied needs.' (Winder, Richard E. and Judd, Daniel K., 1996, organizational orienteering: Linking Deming, Covey, and Senge in an Integrated Five Dimension Quality Model). Quality is all about conformance to requirements or fitness for use which can be defined through five principal approaches: (1) Transcendent quality is an ideal, a condition of excellence. (2) Product-based quality is based on a product attribute. (3) User-based quality is fitness for use. (4) Manufacturing-based quality is conformance to requirements. (5) Value-based quality is the degree of excellence at an acceptable price. Also, quality has two major components: (1) quality of conformance-quality is defined by the absence of defects, and (2) quality of design-quality is measured by the degree of customer satisfaction with a product's characteristics and features. (http://scrc.ncsu.edu/public/d efinitions.html). Quality management enhances an organization's profits and gets them greater margins. The importance of quality can be seen by the fact that we as customers never want to associate our selves with a bad quality product. That can be with respect to: Performance Features Reliability Durability Conformance Serviceability Responsiveness Competence communication Credibility Access security Aesthetics Perceived quality This not only results in you never availing that service or product but spreading the word around to others you concerned with. This obviously affects the sales of the product or service causing problems for the organization. Goodman et al. (2000), based on a range of studies carried out by TARP (Technical Assistance Research Programs), states: Quality and service improvements can be directly and logically linked to enhanced revenue within one's own company; and secondly, higher quality allows companies to obtain higher margins. These arguments were proven by various surveys which resulted in the following conclusions which prove the relation of quality and service improvements to the revenues and profits of the organization. (Source: CMC Partnership Ltd. (1991)) - Problems decrease customer loyalty by 15 per cent to 30 per cent: - 50 per cent of individual consumers and 25 per cent of business customers who have problems never complain