Chapter 1, Problem 7EYCT

20)Which of the following is the best definition of an internal user of accounting information? A) Creditors, such as banks, that use accounting information to evaluate the risk of lending money B) Investors who use accounting information to decide whether to buy or sell stock C) Managers who use accounting information to plan, organize, and run a business D) Labor unions who use accounting information to examine the ability of the company to pay increased wages and benefits

The main purpose of company accounts is stewardship, so accounting standards based on ‘decision-usefulness for investors’ are misconceived. And making the standards compulsory ‘Instructions’ rather than voluntary ‘Suggestions’ causes problems. What are your thoughts on this in relation to PAS 1?

Determine whether the following statements are True or False and provide an essay worthy explanation.  A user who logs in to the computer-based accounting system to enter invoices should also have access to the portion of the system that would allow her/him to order goods.  It is necessary that managers remember that they are stewards of funds expended by a business - that the funds are not owned by the managers.

Some argue that having various organizations establish accounting principles is wasteful and inefficient. Rather than mandating accounting rules, each company could voluntarily disclose the type of information it considered important. In addition, if an investor wants additional information, the investor could contact the company and pay to receive the additional information desired. Instructions Comment on the appropriateness of this viewpoint.

A)Differentiate between traditional reporting and Integrated reporting.   B)   Evaluate earnings management and identify TWO (2) techniques use in earnings management.     C)  Discuss what are the factors that can influence managers to practice unethical behaviour such as fraud.

Some argue that having various organizations establish accounting principles is wasteful and inefficient. Rather than mandating accounting rules, each company could voluntarily disclose the type of information it considered important. In addition, if an investor wants additional information, the investor could contact the company and pay to receive the additional information desired.

You are required to prepare a reflection paper that incorporates your answers to the following questions: 1. Besides earning a profit, what other objectives might a business have? How can Accounting play an important role in these objectives? 2. A new manager of a retail company suggests that the company should prepare its Statement of Profit or Loss on the basis of cash receipts and cash expenditures (except for the acquisition of fixed assets, such as plant and equipment). He argues that managers, investors, creditors, and others are more interested in cash receipts and disbursements than in accrual-based accounting. Do you think he is correct? Explain. 3. The manager of your company told you to go out to the warehouse and count merchandise inventory. He said that owner is coming for a meeting next week and the manager wanted to put on a good show. He asked you to make the inventory higher by counting the first and last row twice. The higher ending inventory will result in higher…

Consider the dilemma you might someday face if you are the chief financial officer of a company that is struggling to maintain a positive cash flow, despite the fact that the company is reporting a substantial positive net income. Maybe the problem is so severe that there is often insufficient cash to pay ordinary business expenses, like utilities, salaries, and payments to suppliers. Assume that you have been asked to communicate to your board of directors about your companys year, in retrospect, as well as your vision for the companys future. Write a memo that expresses your insights about past experience and present prospects for the company. Note that the challenge of the assignment is to keep your integrity intact, while putting a positive spin on the situation, as much as is reasonably possible. How can you envision the situation turning into a success story?

Use the internet to research one manufacturing, one retail (or merchandising), and one service business. For each business, describe the following: A. the primary purpose of the entity B. the types of activities that accountants would record (hint: what is the source of the business funding, and what costs might the business have?) C. the types of decisions that might be made in this organization and how financial and nonfinancial information might help the decision-making process