Week 4 Discussion 2 (Chapter 6) Inventories - Assignment Example

Week 4 Discussion 2 (Chapter 6) "Inventories" of the of Week 4 Discussion 2 (Chapter 6) "Inventories" Answer Although there is no best model for accounting the inventory related costs as the decision for selecting the accounting method depends upon the management’s discretion to either report high income to show profitability or less income to escape income taxes. But the method I recommend to be adopted in the fast food franchise is “Specific Identification” (Ojugo, 2009). Specific Identification helps in the positive identification of the specific types of units sold as well as those still lying in the ending inventories.

This method will help the restaurant to accurately ascertain ending inventory as well as cost of goods sold. It can be achieved by using radio frequency, bar coding and electronic product codes on item usually employed in the manufacturing of fast food like breads, meat, cheese, oil etc. All such items may be purchased from good suppliers who offer them in notified quantities with coded information (Warren, Reeve & Duchac, 2011). Answer 2Being different natured businesses, the vending truck and the physician’s office involve only a few numbers of individuals while a shoe-retailer might involve a great number of workers and as the number of workers increase more control efforts are required to escape the loss of inventory by theft and damage.

Hence the guidelines might be strict and comprehensive for the shoe- retailer but they may be less rigid for the physician’s office and the food vending truck. An internal control system is required in all sorts of businesses to ensure appropriate management of inventory can be done (Axsäter, 2006). In order to implement a proper inventory control mechanism, the following suggestions must be implemented. First of all a written procedure and policy guidelines for inventory management at department level is needed.

Then in order to fully implement the framed policy, all the staff should be given proper training. Duties should be separated sufficiently among individuals having the responsibility for the physical inventory like placing an order, receiving, selling/ distributing and those having the responsibility for accounting the inventory records like sanctioning payments, appointing departments/customers, preserving the perpetual merchandise inventory balance within the Financial System and then reconciling it.

However each can install an inventory system that keeps the record of all sorts of activities related to inventory including acquiring, sales, adjustments and returns and it should be secured in a way that any item of inventory may neither be removed nor affected without being recorded. Moreover, a period costing and counting of inventory must be conducted at least once in a quarter along with more recurrent counts depending upon the vulnerability and size of embezzlement of the inventory must be made (Albrecht et al., 2010).ReferencesAlbrecht, W. S., Stice, E. K., Stice, J. D. & Swain, M. R. (2010).

Accounting: Concepts and Applications. Cengage Learning.Axsäter, S. (2006). Inventory Control. 2nd ed. Springer.Ojugo, C. (2009). Practical Food and Beverage Cost Control. Cengage Learning.Warren, C. S., Reeve, J. M. & Duchac, J. (2011). Accounting. Cengage Learning.