The accounts receivable clerk should not advisably conduct bank reconciliation as and when it is to be undertaken. This because Bank reconciliation provides an opportunity not only to rectify mistakes but also to detect cases of fraud or misappropriation of funds (Edmonds et al, 2013). Normally, an accountant of Bookkeeper handles the reconciliation.
D.
Speeding up the collection of receivables
Rewarding early payments and punishing delayed payments.
Hiring an external collection agency or attorney.
Matching Items
A
A
E
F
E
B
F
D
E
B
D
B
C
Methods of valuing inventory
"FIFO" stands for first-in, first-out
First-in, first-out operates under the assumption that the segment of the inventory that was bought at the earliest will be the first to be sold too. This means that the inventory costs of the inventory costs of the oldest stock are the ones that will be reflected earliest in the books. The final inventory will also reflect the oldest stock having been moved before the newest (Edmonds et al, 2013).
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Pros
One of the major pros of FIFO is that it is acceptable under International Financial Reporting Standards (IFRS) unlike some inventory valuing methods such as LIFO. With many American companies also operating internationally, acceptability under IFRS is critical. Secondly, FIFO is simple and eliminates most ambiguities associated with the more complex systems such as the average cost or weighted average cost.
Cons
Most companies who do not need IFRS certification avoid FIFO because it lacks income tax cushions in the event of inflation.
'Highest In, First Out – HIFO
This is a circumspect inventory valuing systems where the inventory with the highest cost is reflected as the first to be sold. This maintains the highest possible inventory expenses (Edmonds et al, 2013).
Pros
HIFO enables the organization to reflect the lowest possible available expenses while at the same time having the highest possible inventory costs. This will create the lowest possible taxable income leading to savings in taxes.
Cons
Unlike the most other inventory valuation methods, HIFO has the highest preponderance of error for the organization as record manipulation is made for higher margins.
Floats
Receivables float relates to payments that are indicated as having been credited to an account yet the bank has not yet received the actual monies from the payee. This normally takes place when there is an arrangement with the bank to ensure that as much credit as possible is reflected in the account to ensure smooth operations of the account. The bank will, as a service to the customer not wait until the entire process of clearing incoming checks is undertaken so that the monies can be reflected. However, although the money is reflected, it is not actually in the account hence being referred to as receivable floats. It can also be considered as available monies but pending confirmation (Petty et al, 2015).
Payment float can be considered as artificial money that seems available for use by the company but is not really available since monies have already been paid against them. A company can issue checks for all the monies in its accounts but not all these checks will have undergone the complete process of cashing. However, as the banks are aware that the checks have been issued, the monies should not be available in the account as they have already been remitted. However, when the bank has an arrangement with the customer, the same monies can still be available for other checks to be issued thus allowing the customer to issue checks that are beyond the amount of money actually available in the account. This extra money that is both paid but still seemingly available is the payment float (Petty et al, 2015).
Payback Method
Payback methods refer to when the decision on whether or not to invest is made purely on the anticipated payback period. The payback period, on the other hand, refers to the period that the company will take to recoup the investment made in a particular project. The controller will consider not only how much money is being invested into the project but also how much that money will remain unavailable as the test on the viability of the project (Petty et al, 2015).
Pros
The payback method is comprehensive due to its ability to consider the cost of the project from both the amounts expended and how long they will remain committed before the company can break even. A project may seem viable because it will still pay back the investment but the payback period can be the Achilles heel. The monies can stay out for so long that even if it comes back, the company will still have made considerable losses.
Cons
Assessment of payback period is based on variables and may not be accurate. This means that the actual payback period is subject to inaccuracies. These inaccuracies will be much higher than the inaccuracies in establishing the cost of the project. Using this method, therefore, opens up the project for a higher propensity for errors (Petty et al, 2015).
Reflection of Controller Roles
Among the roles that I would enjoy as the controller is budgeting. Budgeting entails planning for the income and expenditure of the company within an oncoming specified period such as a quarter of a year. Budgeting is exciting as there is neither actual income nor actual expenses to use when preparing the budget since the period canvassed have not even happened. It entails seeking to understand the company and the future then calculating the possibilities which are really exciting more so when well-calculated projections are vindicated by time.
Another enjoyable role is cost accounting more so from the analyzing and evaluation perspectives. This entails seeking to understand, evaluate, and record how much the company is spending while running its costs. Modern entrepreneurship uses innovation to increase profits overheads and cost accounting would create an avenue for this (Petty et al, 2015). Cost accounting enables the controller to participate in this useful endeavor, an exercise that I find interesting.
References
Edmonds, T. P., McNair, F. M., Olds, P. R., & Milam, E. E. (2013). Fundamental financial accounting concepts . New York, NY: McGraw-Hill Irwin
Petty, J. W., Titman, S., Keown, A. J., Martin, P., Martin, J. D., & Burrow, M. (2015). Financial management: Principles and applications . New York City: Pearson Higher Education AU
