Business Question for Accountants
10-26-2005, 08:43 AM
#31
Registered User
Originally Posted by Scott Evil,Oct 26 2005, 11:52 AM
ok Mr. Smarty-pants, Ford records vehicle sales on its books when the cars are shipped. The dealer has paid for them at that point too. In Ford's eyes, that is a sale. They will record it as a cash inflow. There is your cash register--if that helps you understand it. If you really want to get very techinical, we can talk about the provisions that they are recording at the same time for hold-back, incentives, buy-back provisions, dealer covenant issues, volume discounts, etc. I am not saying that stuff is not important, but the key thing is: Are the focking cars being shipped to dealers as they are made or sitting in a parking lot because nobody wants them? Pretty Simple.
Maybe I am an idiot for keeping a simplified view-point, but it sure beats the BS that gets pumped out into the media. The basics are where the focus should be.
Maybe things work a little differently in Canada, either that or you got C's and D's in accounting and failed finance altogether.
Maybe I am an idiot for keeping a simplified view-point, but it sure beats the BS that gets pumped out into the media. The basics are where the focus should be.
Maybe things work a little differently in Canada, either that or you got C's and D's in accounting and failed finance altogether.
anyway, as your answer became longer, you were getting closer to the concept as more details were being brought out.
what happens to the cash flow stmt in between the production of the vehicle and when it's shipped? what if that period was 1 week? 1 month? 3 months?
a sale doesn't always mean money in the bank....not only is that an oversimplification, but frankly, it's wrong.
did you know most co.'s book sales as soon as they have a valid and binding PO in hand?
a PO is a LONG way away from receiving pymt.
10-26-2005, 09:03 AM
#32
Registered User
Originally Posted by SanMarinoCpe,Oct 26 2005, 06:13 AM
So now the question is if you were to invest into a company what would you use to make that decision? Since the accounting can be manipulated to show situations that do not exist, you really cant use that.
Reading the reports will help and depending upon your background and experience with the subject industry, you may pickup on where the company is heading and be able to decifer the accounting numbers for what they really are. This is why I use a financial advisor. Again, I am no expert. I just know enough to know I don't know enough and leave it to those that do.
Here is a good link that may help.
LINK
10-26-2005, 11:59 AM
#33
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I have seen a lot of retailers do that, and a lot of them get in trouble for it. Drug companies in the US are a good example, especially when returnes screw up their pretty trends in the next reporting period.
I also do not believe every sales leads to money in the bank. That is an over-simplification. In fact that money is normally already spent. The cash-flow statement will show that, or allow an educated reader to make that interpretation.
I also do not believe every sales leads to money in the bank. That is an over-simplification. In fact that money is normally already spent. The cash-flow statement will show that, or allow an educated reader to make that interpretation.
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