ACCOUNTANTS:How do Employment agencies account for résumés submitted by job applicant

[daboyou]

ACCOUNTANTS Please help: How do Employment agencies account for résumés submitted online?

I am doing an assignment where i have to give advice to a business owner who is inept to accounting policies. On of their accountants capitalized resumes in their books as follows:

DR inventory 2100000
cr Gain on Inventory 2100000

As accountants, would you agree with this? If not, what and how are these "résumés" accounted for in the books intended to maximize Net income?

 

[kirby]

Nope, don't agree at all. Looks like those bozos recorded income just because they have received resumes that might someday become a placement. The employment agency does not earn anything until a candidate is placed in a job AND typically remains there for 3 months. The really big problem is breaking the news to the owner who, right now, thinks he's earned $2.1 million.

 

[saad25]

I second Kirby and I think the question that also needs to be asked is why did the accountant do this? Generally with recruitment consultants they have a c.v or resume database which has got nothing to do with the ERP system ( accounting system). For e.g you could have a 100 million c.v's on your database but if none of them have been placed, hence revenue generated, there is nothing to recognise. Apart from a bunch of pieces of paper & numerous emails.

hope this further helps

 

[accounting nerd]

Agreed - not only is the gain wrong but how would they even think to consider this "inventory"?