STOCK SYSTEMS, IN
THE ACCOUNTING PRINCIPLES IN THE EVALUATION OF STOCKS AND ITS IMPACT ON THE
FINANCIAL PERFORMANCE
By
The Malaysian pharmaceutical industry is yet developed as in United Kingdom and United States. It consists of guardian, a popular Malaysian-based pharmacy that has branches all over Malaysia and neighboring countries, and other privately owned, small pharmacies. One of the objectives in this research is to look at the impact of different stock systems on the financial performance of pharmacies. The two stock systems for merchandising company are perpetual systems, and periodic system (Harrison & Horngren, 1998). Also the researcher has anticipated to find out how pharmacies value their stocks. This is an imperative area, as different stock valuations will result in different profits, and thus taxes payable. Another aim of this research is to explore which type of systems is popularly acceptable, and thus its impact on the company in term of profit, and management. To collect pertinent primary data and information, the researcher will use techniques such as personal interviews, telephone interviews, and self-administered questionnaires were a sample of fifty practitioners will be used. The two companies chosen for personal interviews are Guardian Pharmacy (two branches), and UK Pharmacy. From the analysis of this research, perpetual stock system (computerized) is more preferred by pharmacies and other respondents. Though manual punching cash registers are still being used, they are looking forward to the change of systems. The computerized systems will facilitate more effective and efficient management, and being technologically advance. It is recommended that companies pay attention to their stock management and control, as it would directly affect the financial undertaking of companies. The FIFO method of pricing would create greater stock amount and thus the gross profit and the tax payable. Hence, to abide the law and to reduce the tax payments, the weighted-average method is most appropriate.
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April 1999
Number 20