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The sale should be recorded when it is made if Dobbs’ desires to be correct and truthful. The date of sale should always be recorded in the month it is made. The shipping date has nothing to do with the reality of the purchase date; although, good business practice would be to ship the merchandise right after it was purchased; since the new owner obviously bought the merchandise for their own inventory purpose and business need, and because they take ownership at shipping point. I think Dobbs’ uses unethical shipping practices.Do you approve or disapprove of Dobbs’ manner of deciding when to ship goods to customers and record the sales revenue? If you approve, give your reason. If you disapprove, identify a better way to decide when to ship goods.No I do not approve of Dobbs’ manner of deciding when to ship; the reason is clear, Dobbs is making the decision based on making the books look better for a particular period, which is unethical and illegal. In reality, it is untruthful and poor practice. This principle can be covered bythe terms, date of sale, and date of shipment. When the customer gets the merchandise, and then inspects it, they should have a reasonable amount of time to either pay the balance in a timely fashion, apply discounts if applicable, or to return product that might be defective. Since the discounts are determined by when the buyer is invoiced, which is usually for the date of purchase, the buyer should have a right to inspect their purchase in a timely manner. In addition, if Dobbs’ were to use that system to acquire business loans, and the bank found out about their practice, it would be considered fraud. The accountant should make sure that all sales be recorded on the date and period that they were made; therefore, Dobbs’ would be using ethical and legal practice in their billing policy.Week 3 Discussion 2Describe the inventory valuation methods FIFO and LIFO.Which items are included in ending inventory under each method?Respond to at least two of your classmates’ postings.The inventory valuation methods in FIFO and LIFO are reported as follows:FIFO = First In, First Out; based on a sale, the inventory purchased first is the inventory sold first.The ending inventory in this situation would be more higher cost per unit on hand, selling the lower cost per unit goods first.( The last - the newest- costs)LIFO - Last In, First Out; based on a sale, the inventory that was purchased last is the inventory that is sold first.The ending inventory in this situation would be the first inventory purchased, thus be the lower cost per unit on hand
(The newest - the last - costs)Each of these accounting practices are acceptable according to the GAAP, but if the company is switching their accounting methods to the IFRS reporting standards, then it would need to switch to the FIFO method of inventory sales.More companies are probably using the LIFO method of accounting and sales since the inventory on hand in this case would be the lower price per unit good, thus keeping their inventory costs low.This type of accounting seems to me to be fraudulent to those buying the goods for not only the reason of buying the higher price per unit good first, but also for the reason that the seller of the good has gained more money on paper for the purchase and the inventory on handis now less.Horngren, C., Harrison W. &Oliver, M. (2012). Accounting (9th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.