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effect on accounting

kivi poteat's Profile

I am a recent graduate and a staff accountant at a new car dealership. I noticed to day that the parts department is debiting purchase discounts to pad their inventory.

I believe that has multiple negative effects on the business. First parts inventory is undervalued. Second the parts department income is overstated.

Managers are receiving bonuses they shouldn't as well as the company paying income taxes on money the dealership didn't actually earn.

Before I go to the CFO I want to make sure I understand what is going on. Any advice and perspectives would be greatly appreciated.

Answers

Steve Sheridan
Title: Associate
Company: Dean Lewis Associates
(Associate, Dean Lewis Associates) |

It would be helpful to know how the parts department makes debits to a g/l account.

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