Description
Create a memo to stakeholders with an executive summary using logical reasoning based on your tax research to explain why the client should adopt your recommendations for structuring business operations.
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Executive summary of Awesome Distributors
The Awesome Distributors is a kitchen ware supplies business that is a newly introduced
sole proprietorship business. The business is management by Mr. Paul Gregory. As a sole
proprietorship form of business, the business is adequately managed by a single person as it is
still small. Its main products are kitchen ware, i.e., utensils, cutlery, cooking pans among others.
The business is charged with the role of selling as well as distributing the goods to the customers
at their door step, and this happens to be a competitive advantage.
Make a recommendation for the appropriate inventory cost flow assumption for a merchandising
business
Inventory cost flow assumptions are crucial in the calculation of value of goods that have
been sold as well as the final inventory. Different businesses assume different assumptions on
the goods to be sold as well as those to remain in the inventory. The main purpose of these
assumptions is for tax agreement. The main function of tax assumption is to ensure that the sum
of the value of all goods sold plus those that are in the ending inventory for tax equates the actual
value of the goods sold. In simple terms over the life of the firm, the aggregate cost of
merchandise sold for financial/ monetary revealing and duty purposes must be equivalent to the
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aggregate cost paid for the stock. There are several cost flow assumptions such as weighted
average cost, FIFO, LIFO and specific identification. Each of the mentioned assumptions has its
strength as well as weaknesses depending on the type of business. This cost flow assumption is
the correct inverse of the specific identification technique: All merchandise of a specific kind is
thought to be interchangeable, and the main distinction is their price tag. Cost contrasts are
because of outer elements (for instance, expansion; a sudden cool spell influencing the
accessibility of delivering; an increment in the cost of gas since OPEC diminishes the measure of
oil pumped. Under the weighted average cost flow assumptions are included and separated by
the aggregate number of units bought. At the finish of the bookkeeping time frame, the qua...