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Financial statements are the end products of an organization in particular and it is something in which all of the information related to the company could be found . Financial Statement, which commonly referred as Financial Reports, is one of the reports in which business of the company duly described comprehensively along with the description of the financial competitiveness of the company. Inevitably, every company has a unique business under their nose and the method to keep the things alive also varies from organizations to organizations . The main perspective of this assignment is to answer two different questions related to a selected company. The company which has been selected for the same is Amazon. Amazon is basically an American based international electronic company with Seattle, Washington, United States (US). The company sells software, video games, electronics and other items. Amazon earned net revenue of US$ 61.09 billion in the fiscal year (FY) 2013. E-bay is the most intellectual competitor of the company and Amazon is doing an exceptional job as far as competing with this organization and giving a tough time to them.
- The first question is all about analyzing whether Amazon is using the Job order costing or Process Costing. Job Order Costing is more towards service oriented companies, in which a company would render the cost after getting the order from their customer rather than applying the cost on the manufacturing process. Costing pertains to manufacturing is known as Process Costing and it is yet another important type of Costing. Amazon is a Service Oriented Company and according to the business report of the company, it is found that the company is using the Job Order Costing system to run their operations. It is clearly mentioned in the financial statement of the company that the company have number of retailers in different parts of the world and when a customer book a specific order with the company, then the company talk directly to their vendors to have the products accordingly at the same time. There is yet another important reason from which it could found that the costing method uses by the company is Job Order instead of Process Costing, because Amazon is not a manufacture of a product, they are the retailers and works as an agent or intermediary between the buyers and sellers.
- Inventory is one of the most integral parts of the financial statement and it is specifically found in t he Balance Sheet of a company. Theoretically, Inventory means the units held by the company for their future needs. Inventories held in the warehouses of a company could be sale out in later times. Inventory Management has been defined in the International Accounting Standard (IAS-2) and it is vital for the companies to manage their inventories effectively. The components of Inventory are raw material, work in process and finished goods. According to the financial statement of the company, it is found that the total inventory recorded in the fiscal year (FY) 2010 was US$ 3,202 million which had been categorized into different sections in particular. Again, the company is not a manufacturing company, hence the components like raw material and finished goods could not be into play for the company, as all of the inventories held by the company are already in the phase of finished goods.
Reference List
Pandey, I. (2009). Financial Management. New York: Prentice Hall.
Shapiro, A. C. (2009). Multinational Financial Management. Chicago: McGraw Hill.
