Question

Think of a merchandise company you would like to open.

1-what type of business you are opening

2-which of the two types of inventory systems do you think your business would use and why?

4- pretend you are making a large sale to a customer on credit. post a description or a visual of a draft sales invoice for this customer. make sure your sales invoice includes the following items:

your company information

date of sale

-your customer's information

-an example product you sell with name, description, price per unit, and number of units sold.

-term of sale including credit terms and shipping charges, with numerical figures for shipping charges.

-any contract language necessary to further establish the terms of sales.

5- how would you maintain control over the inventory for your company ? what measures would you take either from a physical assets standpoint or accounting principle standpoint?

Answer 1

1. Business Choosen : An wholesale Groceries Store.

2. Two Types of Inventory System :

• FIFO Method : It will be more appropriate as each and every item cost will be precisely Known and the old stock will be cleared . Because of this method, it is easy to identify unit wise profits.
• Weighted Average Rate Method : This method will gives us the cost of each product based on Weighted average cost of all same items which were purchased at different times. Compared to this method, FIFO is more appropriate.

3. Sample Invoice Format :

<Company Name>		INVOICE
<123 Street Address, City, State, Zip/Post>
<Website, Email Address>
<Phone Number>
BILL TO		SHIP TO	Invoice No:	#INV00001
<Contact Name>		<Name / Dept>	Invoice Date:	11/11/11
<Client Company Name>		<Client Company Name>	Due Date:	12/12/12
<Address>		<Address>
<Phone, Email>		<Phone>
DESCRIPTION	QTY	UNIT PRICE	TOTAL
			0.00
			0.00
			0.00
			0.00
			0.00
			0.00
			0.00
			0.00
			0.00
			0.00
			0.00
			SUBTOTAL	0.00
Tank you for your business!		DISCOUNT	0.00
	SUBTOTAL LESS DISCOUNT	0.00
	TAX RATE	0.00%
	TOTAL TAX	0.00
	SHIPPING/HANDLING	0.00
		Balance Due	$                -
Terms & Instructions
<payment should be made within 30 days of Invoice. Overdue Payments will attract Interest rate of 18% per annum>
<Goods once sold will not be taken back >
<All Disputes are subject to New York Jurisdiction only>

4a. System to be maintained for Internal Control Process :

• All items to be with barcode labels.
• Security System to be strengthened
• CC TV 's will be installed.
• Stock Audits system shall be placed
• System billing will be done to avoid confusion or loss of theft
• All inward items shall be properly verified.

4b. Measures to be taken on stock :

• Insurance of stock will be done.
• Fire alarming system will be placed
• Water Sprinklers will be placed
• Frequent maintenance of Electric Items to avoid any Short Circuits
• Internal Auditor will be appointed