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Identifying relevant Malaysian Financial Reporting Standard with Inventory Cycle
Referring to have been stated above, the selected company was a small sized entity and therefore, the processes under its inventory cycle was not complex like those in retailers as well as manufacturers.
Figure 1.1 Inventory cycle with shaded area for activities related to MFRS
Principally, the fundamental issue in accounting for inventories is to define the amount to be recognized as asset as well as amount to be charged as expenses in contrast to associated revenue. Therefore, FRS 102 Inventories provide guidelines in determining the cost of inventories, cost formulas used to assign costs of inventories, the amount recognized as expenses and write down to net realisable value. Inventories comprises those:
Held for sale in the ordinary cost of business;
In the process of production for such sale; or
In the form of materials or supplies to be consumed in the production process or in the rendering of services (Lazar & Choo, 2008).
Inventories also includes goods purchased and held for resale which encompasses buying merchandise by a retailer.
Connecting to the selected business, the existence of the inventory of Waqec Stationary Sdn Bhd, are essentially buying the merchandise and held them for sale in the ordinary cost of business which is under the classification of inventories.
As we can see from the figure 1.1 above, FRS 102 Inventory in this case mainly focuses on the shaded area, which are numerous accounting issues arise particularly in determining the costs of inventories, Net Realizable Value.
Purchase Order Activity
When purchasing a certain commodity, Waqec Sdn Bhd will be issued invoices from various suppliers. It contains the receipt of a purchase order which is also the agreed amount of cost that will be borne by the buyer, which is the entity itself.
Cost
According to FRS 102 Inventories, cost of inventory contains all costs incurred to carry the
Referring to have been stated above, the selected company was a small sized entity and therefore, the processes under its inventory cycle was not complex like those in retailers as well as manufacturers.
Figure 1.1 Inventory cycle with shaded area for activities related to MFRS
Principally, the fundamental issue in accounting for inventories is to define the amount to be recognized as asset as well as amount to be charged as expenses in contrast to associated revenue. Therefore, FRS 102 Inventories provide guidelines in determining the cost of inventories, cost formulas used to assign costs of inventories, the amount recognized as expenses and write down to net realisable value. Inventories comprises those:
Held for sale in the ordinary cost of business;
In the process of production for such sale; or
In the form of materials or supplies to be consumed in the production process or in the rendering of services (Lazar & Choo, 2008).
Inventories also includes goods purchased and held for resale which encompasses buying merchandise by a retailer.
Connecting to the selected business, the existence of the inventory of Waqec Stationary Sdn Bhd, are essentially buying the merchandise and held them for sale in the ordinary cost of business which is under the classification of inventories.
As we can see from the figure 1.1 above, FRS 102 Inventory in this case mainly focuses on the shaded area, which are numerous accounting issues arise particularly in determining the costs of inventories, Net Realizable Value.
Purchase Order Activity
When purchasing a certain commodity, Waqec Sdn Bhd will be issued invoices from various suppliers. It contains the receipt of a purchase order which is also the agreed amount of cost that will be borne by the buyer, which is the entity itself.
Cost
According to FRS 102 Inventories, cost of inventory contains all costs incurred to carry the