ACC-250 Week 5 DQ 1

ACC-250 Week 5 DQ 1

Financial Accounting – Merchandising and Inventory Accounting

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Grand Canyon University

Respond to the following question, exercise, problem, or case in your textbook: “Chapter 5 Critical Thinking:Ethical Issue 5-1.” Use complete sentences, cite any sources used, and answer all required parts.

Ethical Issue 5-1

Dobbs Wholesale Antiques makes all sales under terms of FOB shipping point. The company usually ships inventory to customers approximately one week after receiving the order. For orders received late in December, Kathy Dobbs, the owner, decides when to ship the goods. If profits are already at an acceptable level, Dobbs delays shipment until January. If profits for the current year are lagging behind expectations, Dobbs ships the goods during December.

Requirements

Under Dobb’s FOB policy, when should the company record a sale?

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. (There is no accounting rule against Dobbs’ practice.)