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Report to Owners of Ruffians Terms of Reference This report is to assess the appropriateness of the accounting methods Saskatoon store used and whether the accounting methods used by the Saskatoon store were fair in the context of the contest. Because Shmevan has 75 stores in the chain, it is important to use a recognized standard as the basis for preparing the statement. Accordingly, I recommend using GAAP. While GAAP are not necessarily the best criteria to settle the unsolved issues, GAAP are widely known and recognized. And basically all recommendations made in this report are supportable in terms of GAAP, fairness, and accrual accounting. The objective in preparing this report is to come up with reasonable and justified assessments for the controversial accounting issues that Saskatoon store has in its measurement of net income in year 2004 and 2005. Issues The issues to deal with in this report are: the revenue recognition method, inventory valuation method, inventory write off, commercials cost, advance commission payment in 2004, gain from sales of capital assets.
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