Accounting Solutions 2

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Solutions to Lecture Activities

ACCT 1046 Introductory Accounting

Semester 1, 2010

Lecture 1 Unit 1 – Business Decision Making and Accounting

Lecture Activity 1
1. The accounting information system comprises four main procedures: analysis, recording, reporting and identification. The order in which they occur is: a) Reporting, analysis, recording, identification b) Identification, analysis, recording, reporting c) Analysis, identification, recording, reporting d) Identification, recording, analysis, reporting e) Analysis, recording, reporting, identification Source: Workbook to accompany Accounting an Introduction, 3rd edition, Jenner & Silvester, Pearson Prentice Hall 2006

Lecture Activity 1 (continued)
2. Which of the following phrases best describes the key qualitative characteristic of ‘relevance’? a) Relevance means that accounting reports should be expressed with as much clarity as possible b) Relevance infers the same accounting treatment for similar items c) Relevance means that accounting information must not contain any undue bias or error of a material nature d) Relevance means that accounting information should have the ability to influence decisions e) None of the above Source: Workbook to accompany Accounting an Introduction, 3rd edition, Jenner & Silvester, Pearson Prentice Hall 2006

Lecture Activity 1 (continued)
3. When accounting information is free from material bias or error, it is said to be: a) Comparable b) Reliable c) Relevant d) Understandable e) Material Source: Workbook to accompany Accounting an Introduction, 3rd edition, Jenner & Silvester, Pearson Prentice Hall 2006

Lecture Activity 1 (continued)
4. An item of accounting information that is relevant to a particular decision, and reliable, comparable and understandable by decision makers, may still not be produced because: a) Nobody would be interested anyway; b) The costs of producing the information do not outweigh the perceived benefits; c) Unless an accounting standard states that the item needs to be produced, there is no need to do so; d) The costs of producing the information outweigh the perceived benefits; e) None of the above. Source: Workbook to accompany Accounting an Introduction, 3rd edition, Jenner & Silvester, Pearson Prentice Hall 2006

Lecture Activity 1 (continued)
5. Which of the following phrases best describes ‘reliability’ as it relates to accounting information? a) Accounting information should be free from any material error or bias; b) Accounting reports should be expressed as clearly as possible; c) Accounting information must have the ability to influence decisions; d) Items which are essentially similar should be given the same accounting treatment; e) None of the above. Source: Workbook to accompany Accounting an Introduction, 3rd edition, Jenner & Silvester, Pearson Prentice Hall 2006

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Lecture Activity 1 (continued)
6. Accounting information is designed to meet the needs of a) Potential investors only b) Management c) Government agencies only d) Internal and external users Source: Accounting Business Reporting for Decision Making Study Guide, 2nd edition, Boland, Wiley Publishing 2008

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Lecture 2 Unit 2 – Different Accounting Entities

Lecture Activity 1
1. An advantage of a sole trader is that the owner has a) unlimited liability b) a variety of skills available to tap into c) effective control over his or her business strategy d) the Australian stock exchange to help when in financial trouble Adapted from Accounting Business Reporting for Decision Making Study Guide, 2nd edition, Boland, Wiley Publishing 2008

Lecture Activity 1 (continued)
2. Which of the following is not an advantage for a relatively new partnership? a) Resources can be shared among one another b) Each partner has an unlimited liability c) The partnership entity is on a low tax rate of 30 per cent d) The government imposes a high level of regulations on a new partnership...
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