Guillermo Furniture Store Scenario

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Date Submitted: 08/25/2011 07:52 AM

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Guillermo Furniture Store Scenario


ACC 561



Guillermo Furniture Store Scenario

Guillermo Navallez has many decisions to make that could have a grave impact on his business. Some of the hardest and most important decisions deal with finances. The hardest and most important of those decisions deal with budgets and accounting issues.

Guillermo should use prior budgets and performance reports in many types of future decisions. Not the least of those decisions is how to forecast the coming budget. The company may benefit more if Guillermo put more money into high-end or mid-grade materials, depending on the product. Another decision is the portion of materials that can be mid-grade if the product must still carry the high-end label. This question involves ethics as much as it does the materials or merchandise.

Ethics influence all decisions and therefore will affect Guillermo’s accounting decisions. The obvious choices are between right and wrong. The assumption is that Guillermo will follow the law. However, it may be more monetarily beneficial to depreciate inventory in a way that gives the company more income. Guillermo loves making furniture and does not want to lose his company. Guillermo may have to make a choice between honesty and integrity and keeping his family fed. The answer would be hard to make if anyone were in that situation.

The choice between the company and feeding the family is also a prime question for the accounting information to answer. If Guillermo prizes his employees, employee paychecks will be the most relevant information. If he prizes the company above all else, the most relevant information could be the gross bottom line. If company stockholders opinions are appraised at a premium, the net bottom line or stock dividends will be the target for his eagle eye.


Every choice Guillermo Navallez makes concerning his company depend on accounting...