## Monday, March 17, 2008

As y'all should've known by now, rounding offs to the nearest 5 cents will be taking place next month, 1st of April (what a way to get fooled...) Some think it's reasonable, as rounding offs only take place at the total.

E.g. U buy stuffs of RM 10.06 + RM 9.99 + RM 5.44 = RM 25.44

U pay RM 25.45.

Sounds reasonable right, as they round off only at the total.

But of cos, some paranoid ones who live among us thinks it'll be a great way to cheat off money. Well yes, it's possible to do so. Imagine, every items they now round UP to the nearest 5 cents, the profit they gain will be waaaay alot. U can easily imagine how much hypermarkets like Tesco/Giant will be making out of these little cents.

But, i believe there'll be check and balances in this case. As we know, these hypermarkets compete constantly to provide the lowest price possible. And as most of the Bolehlandites are pretty nit-picky, and that few cents really matters!! By rounding up, the hypermarket only risks to lose out customers.

But let's look at the accounts point of view, and this is the place where all nightmares begin.

I'll quote directly from a forumer ay Lowyat.net. (thanks b00n for allowing me to use this)

For instance over the counter customer A is suppose to pay RM1.02 but because of rounding, customer A paid RM1.

Customer B pays the same amount i.e RM1.

But accounting wise, the goods are sold at RM1.02 + RM1.02 = RM2.04. Yet received only RM2 actual cash.

If customer buy 2 of the Rm1.02 products, he supposedly has to pay RM2.04; but instead he paid RM2.05. So if day end calculation is based on customer C, they would have an excess of RM0.01 difference.

If we are to group customer A, B and C purchases it would equal to RM4.08 sold. But actual receivable is only at RM4.05. So net net if they are to look at accounting; there would be a difference of RM0.03.

So wonder how traders especially those that dealt with imposing the 5% or 10% tax would do their accounting treatment. Banks would have even bigger headaches as they look at interest.

edit

magine this.

Item A priced at RM1.01. So in their books it's published at RM1.01. So by right if I cleared 2 of the product, I should get RM2.02 but yet the money I received is Rm2.00. Ok, can basically round it down to RM2.00 in the accounting book. But what if it's sold separately 3 times. i.e. Rm1.01 round down to Rm1.00 every transaction thus received money of RM1 x 3 = Rm3. Accounting books now would show sell of 3 items = Rm1.01 x 3 = Rm3.03. So now should it be rounded up or rounded down to reconcile between amount rounded received vs the book?!

That's the accounting problem I foresee in their books. But since I'm not into finance or accounting, I do not know how they're going to overcome this problem. Let's hope there's someone from this background to give us some insights.

There's alot more to that, but nay, i wouldn't wanna bore the hell out of u all. Just thought this is some rather interesting info to share wit all of u all.

Rounding off.

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