Articles
Cost Method of Accounting: Can Retail Companies Really Afford Not to Adopt It?
February 17, 2010
•White Paper: Cost Method of Accounting: Can Retail Companies Really Afford Not to Adopt It?
By Capgemini
Retail companies have traditionally used the Retail Method of Accounting (RMA) to avoid the costs associated with tracking inventory at the unit level in a perpetual basis. New International Financial Reporting Standards (IFRS) supported by the U.S. Securities and Exchange Commission (SEC) will require the adoption of item-location inventory accounting by 2016. Even if this requirement does not become mandatory, those retail companies continuing to use RMA will be missing the business and managerial opportunities offered by tracking inventory more accurately and being able to better understand true profitability at stores and product category levels. More than 113 countries and 12,000 companies around the world have adopted the IFRS standard for financial reporting. In a global economy, where investors can place their money in any country, the ability to be able to compare financial statements in a simple and transparent manner will benefit the companies that have adopted the new standards. And should IFRS become a mandate in the U.S. in 2011, retail companies still using RMA will be faced with transitioning to a new system in a shorter, possibly more expensive, timeframe.
Click Here To Download:•White Paper: Cost Method of Accounting: Can Retail Companies Really Afford Not to Adopt It?
