Assignment questions
Question 1. Explain why accounting information is generally considered to be useful, and why you need to know the basics of accounting.
Question 2. Sonumatics in New South Wales, Australia, is a computer firm run by Max Brenner and his family. Max intends to sell the shares of this firm to investors on the Australian Securities Exchange (ASX). This would mean that the firm would ‘go public' which will result in investors having a say in the management of the firm. Max is worried about losing control of the business, which his family has owned for generations. He did not have to provide a lot of accounting information to outsiders and doesn't like the prospect of interference with a business that he believes he knows better than anyone else.
As a close friend of Max, you have been asked to advise him on the implications of being listed on the ASX for the management of his firm. Refer to the ASX's principles of good corporate governance on their website at https://www.axs,cin,ay/regulation/corporate-governance-council.htm>in providing your answer to Max's question. How do you think these principles might help firms to be run ethically?
Question 3. Consider the following statement of financial position of a manufacturing business:
Turner manufacturing Co.
Statement of financial position as at 30 April 2016
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$
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$
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Current assets
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|
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Cash at bank
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12,000
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|
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Accounts receivable
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44,000
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|
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Inventory
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48,000
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|
|
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104,000
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Non-current assets
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|
|
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Fixtures and fittings
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14,000
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|
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Motor vehicles
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13,000
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|
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Plant and machinery
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46,000
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|
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Freehold premises
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88,000
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161,000
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Total assets
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265,000
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Current liabilities
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|
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Accounts payable
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24,000
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Bank overdraft
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18,000
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|
|
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42,000
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Non-current liabilities
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|
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Loan
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160,000
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Total liabilities
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202,000
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Owners' equity
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|
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Opening balance
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42,000
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|
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Add profit
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32,000
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|
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74,000
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Less drawings
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11,000
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|
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63,000
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Total liabilities and owners' equity
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265,000
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What does this statement tell you about the financial position of the business?
Question 4. However a business is organised, it must meet the needs or demands of various stakeholders.
- What are the different types of business structure?
- What is meant by the term ‘stakeholder'?
- Who are the stakeholders for each type of business?
- What are their needs or demands, and why should they be met?
- Will stakeholder demands affect the choice of business structure?