Reading review problem.Walmart is the largest retail organization in the world; in fiscal year 2008, its net sales were $374.5 billion, resulting in operating income of $22.0 billion. Earnings per share increased for the fifth consecutive year, and free cash flow increased by 25 percent from fiscal year 2007 to fiscal year 2008 (www .walmartstores.com). While there are many important factors leading to Walmart’s impressive results, one of the firm’s critical success factors is its ability to manage its inventory, which totaled more than $35 billion at the end of fiscal 2008. According to
Powanga and Powanga (2008), Walmart uses RFID technology to help manage its inventory. During its pilot test phase, stores using RFID had 16 percent fewer stock-outs than stores not using RFID.
Source: M. Powanga and L. Powanga, “Deploying RFID in Logistics: Criteria and Best Practices and Issues,” The Business Review, Cambridge, Summer 2008.
a. What is RFID technology? How is it used in the acquisition/payment process?
b. RFID is a form of internal control. Which of the four purposes of internal control does it help Walmart achieve?
c. What documents would Walmart likely use in its acquisition/payment process? Which journal entries, if any, are triggered by each document?
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