Users of financial statements

Assignment Help Financial Management
Reference no: EM13488903

Question 1

Identify the four financial statements and the information they provide. Discuss the guidance Generally Accepted Accounting Principles (GAAP) provide concerning the information reported in financial statements and how GAAP assists in ensuring the objective of accounting is achieved. Explain whether users of financial statements should exercise caution when interpreting financial statement compliant with GAAP.

Question 2

Managers are permitted choice in the preparation of accounting information. Discuss the positive and negative implications of permitting choice in the preparation of accounting information. These implications should relate to financial statement users and preparers. You should refer not only to material covered in lectures and your textbook, but also the 2005 journal article by Gowthorpe & Amat "Creative Accounting: Some Ethical Issues of Macro- and Micro-Manipulation" (set as one of your readings this semester and available on UTSonline 'Course Documents').

Question 3

Diversified Rentals Ltd owns a large fleet of different vehicles which are each classified into one of three categories; supercars, vans and city rentals. Newly acquired supercars are very popular when first acquired, but rental demand quickly falls as newer models are released. Supercars are kept in the fleet for 3 years before being sold. Demand and rental revenues for vans are relevantly consistent through the vehicle life, regardless of condition or appearance. The vans are disposed of only when they are completely worn out. The vans are generally completely worn out once they have travelled 350,00km. Finally the demand and revenues for city rentals are relatively consistent up until a point when customers demand vehicles with higher safety standards and Diversified Rentals Ltd is required to dispose of these vehicles. The new chief financial officer of the firm requires advice on which depreciation method to use. Provide recommendations and justifications of which depreciation method(s) are appropriate in this case. Explain how the choice of depreciation method affects reported profits.

Question 4

How would the use of 'cash accounting' rather than 'accrual accounting' reduce 'earnings management'? If over the life of a business, Cash Flows from Operations will equal Profits, why is it considered necessary to make adjustments (period end adjustments or adjusting entries) at the end of each accounting period? Explain why the advantages of 'accrual accounting' outweigh the disadvantages of 'earnings management'.

Question 5

Explain how the perpetual and periodic inventory systems differ, especially in determining Cost of Goods Sold and Ending Inventory? Once a retailer has chosen the inventory system they then have a choice of inventory costing methods: First-In-First-Out (FIFO), Last-In-First-Out (LIFO), weighted average and specific identification. In times of changing inventory prices (both inflation and deflation) how can the choice of the inventory costing method impact reported profits?

Question 6

Is the Statement of Comprehensive Income necessary when we have the Statement of Cash Flows (and allowing external decision makers to predict future cash flows may be the primary function of financial statements)? In answering this question you should also consider the 2001 Accounting Review journal article (set as one of your readings this semester and available on UTSonline 'Course Documents') "Accruals and the Prediction of Future Cash Flows" Barth, Cram & Nelson.

Reference no: EM13488903

Reviews

Write a Review

 

Financial Management Questions & Answers

  Terms of diversity

Description: Write a report about your workplace analysing it in terms of diversity. Convince your manager to develop a "Diversity Management Strategy" by explaining the advantages of having such a strategy. Support your argument with evidence, resea..

  Calculate the sample size

Determine the sample size needed to detect an increase of 5 points. Let alpha = 0.02 and beta = 0.05. Calculate the sample size

  Variable cost-fixed cost and mixed cost

Distinguish between a variable cost, a fixed cost, and a mixed cost. Identify a publicly traded, well-known company, and identify what you envision would be a variable cost, a fixed cost, and a mixed cost for this company.

  What are implications for cash flow and shareholder wealth

Companies often try to keep accounting earnings growing at a relatively steady pace in an effort to avoid large swings in earnings from period to period. They also try to manage earnings targets.

  Unbiased predictor of future exchange rates

Provide proof and please be specific about required conditions on relations between financial variable(s) such as of both countries.

  Advantages of the corporate organizational structure

What inherent characteristic of corporations creates the need for a system of checks on manager behavior and what are some examples of agency problems - what are the advantages and disadvantages of the corporate organizational structure?

  The population mean grade is 78 with a standard deviation

the population mean grade is 78 with a standard deviation of 6 points. determine the sample size needed to detect an

  Rise and fall

Case Study on LONG-TERM CAPITAL MANAGEMENT (A): RISE AND FALL

  You are the financial manager of north plc a listed

you are the financial manager of north plc a listed manufacturing company which has divisions in a number of countries

  How do they earn their return on equity

Different companies have different financial ratios. So Return on Equity for any one company is the product of three ratios which may be quite different in value than the same three ratios for a different company.

  Define environment and general good of society

In particular do you think subjects like customer and employee safety, environment and general good of society fits in this framework or they essentially ignored?

  Discuss specific challenges that you may have experienced

determine the primary manner in which orion has increased your business knowledge in the related subject area.discuss

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd