All Matches
Solution Library
Expert Answer
Textbooks
Search Textbook questions, tutors and Books
Oops, something went wrong!
Change your search query and then try again
Toggle navigation
FREE Trial
S
Books
FREE
Tutors
Study Help
Expert Questions
Accounting
General Management
Mathematics
Finance
Organizational Behaviour
Law
Physics
Operating System
Management Leadership
Sociology
Programming
Marketing
Database
Computer Network
Economics
Textbooks Solutions
Accounting
Managerial Accounting
Management Leadership
Cost Accounting
Statistics
Business Law
Corporate Finance
Finance
Economics
Auditing
Ask a Question
Search
Search
Sign In
Register
study help
business
financial accounting and reporting
Questions and Answers of
Financial Accounting And Reporting
‘A single set of multi-purpose financial statements is unable to satisfy the needs of shareholders for both a stewardship report and a report to assist the prediction of future cash flows.’
Discuss the relevance of the information in the Statement of Recognised Income and Expense to an investor. Explain the advantages and disadvantages of combining the income statement and this
Describe the content of an OFR statement in UK financial statements and discuss whether it should be made mandatory, more prescriptive and audited.
The SEC have objected to the use of the fair override on the grounds that fair is achieved by compliance with standards and that the override could lead to companies concealing poor performance and
The directors of Ufool Ltd are aware that a sizeable number of shareholders, although still a minority, are extremely unhappy with current dividend levels and are agitating for larger
It is said that Format 1 extends the management accounting concept of responsibility accounting to published financial statements. Explain what this means.
Explain the conditions set out in IFRS
for determining whether operations have been discontinued and the problems that might arise in applying them.5 ‘Annual accounts have been put into such a straitjacket overemphasis on uniform
‘The regulators are correct in their thinking that voluntary disclosures, e.g. OFR and Interim Reports, are more helpful to shareholders than disclosures made under mandatory, more closely defined
IAS 1 Presentation of Financial Statements requires the publication of a statement of recognised income and expense or a statement of changes in equity.Explain the need for the publishing of these
What is the relevance of dividend cover if dividends are paid out of distributable profits?
How can distributable profits become non-distributable?
Some members of the board of directors of a company deliberating over a possible source of new capital believe that irredeemable debentures carrying a fixed annual coupon rate would suffice.They also
A company is obliged to reveal, in note form, a quantitative assessment of the dilution of future earnings per share on the assumption that convertible stock in issue will experience total conversion
In 20X6 Alpha AS made the decision to close a loss-making department in 20X7. The company proposed to make a provision for the future costs of termination in the 20X6 income statement.Its argument
As a sales incentive, a computer manufacturer, Burgot SA, offers to buy back its computers after three years at 25% of the original selling price, so providing the customer with a guaranteed residual
A boat manufacturer, Swann SpA, supplies its dealers on a consignment basis, which allows either Swann SpA or a dealer to require a boat to be returned. Each dealer has to arrange insurance for the
Discuss, with reasons, whether boats held by the dealers on consignment should appear as inventory in the balance sheet of Swann SpA or the dealer.
Discuss the problems of interpreting financial reports when there are events after the balance sheet date, and the extent to which you consider IAS 10 should be amended. Illustrate your decisions
D Ltd has a balance on its debtors’ account of £100,000. Previous experience would anticipate bad debts to a maximum of 3%.The company adopts a policy of factoring its debts. Explain how the
The following note appeared in the Jarvis plc 2004 Annual Report:The provision reflects the anticipated costs arising from the Group’s decision not to occupy new premises on which it has entered
The following note appeared in the Eesti Telekom 2003 Annual Report:The factoring of receivables is the sale of receivables. Depending on the type of factoring contract, the buyer acquires the right
Discuss the implications for businesses of a substance approach being used for the presentation of liabilities and equity. Indicate how the terms of an instrument could present problems in
Explain why financial instruments, particularly derivatives, can alter the risk profile of a business. Use a forward currency contract as an example. Discuss whether disclosure alone is sufficient to
‘Disclosure of the fair values of financial instruments (as required by FRS 13 in the UK) is better than measuring them at fair values in the financial statements (as is often required by IAS 39)
A reduction in the credit rating of a business would reduce the fair value of its debt instruments.Explain why this is the case.
Following from Question 4, if the debt instrument was included in the balance sheet at fair value through profit or loss this would mean that a profit would be recognised in the income statement.This
Many groups have treasury policies that use hedging of net positions. They would look at their group-wide exposure in, e.g. foreign currency and then take forward contracts to cover the position.
Interest rate swaps can be designated as hedges of underlying borrowings. A swap of floating for fixed rate is a cash flow hedge, but a swap of fixed for floating is a fair value hedge. Why?
On 1 April year 1, a deep discount bond was issued by DDB AG. It had a face value of £2.5 million covering a five-year term.The lenders were granted a discount of 5%. The coupon rate was 10% on the
On 1 October year 1, RPS plc issued one million £1 5% redeemable preference shares. The shares were issued at a discount of £50,000 and are due to be redeemed on 30 September Year 5. Dividends are
October 20X1, Little Raven plc issued 50,000 debentures, with a par value of £100 each, to investors at £80 each.The debentures are redeemable at par on 30 September 20X6 and have a coupon rate of
The following extract is from Conceptual Framework for Financial Accounting and Reporting: Elements of Financial Statements and Their Measurement, FASB 3, December 1976.The benefits of achieving
The following extract is from ‘Comments of Leonard Spacek’, in R.T. Sprouse and M. Moonitz, A Tentative Set of Broad Accounting Principles for Business Enterprises, Accounting Research Study No.
(a) Explain the limitations of HCA when prices are rising.(b) Why has the HCA model survived in spite of its shortcomings in times of inflation?
What factors should be taken into account when designing a system of accounting for inflation?
To what extent are CCA statements useful to an investor?
‘Historical cost accounting is the worst possible accounting convention, until one considers the alternatives.’ Discuss this statement in relation to CPP, CCA and NRVA.
Discuss the effect on setting performance bonuses for staff if financial performance for a period contains both realised and unrealised gains/losses.
‘The relevant financial performance figure for an investor is the amount available for distribution at the balance sheet date.’ Discuss.
‘Financial statements should reflect realistically the performance and position of an organisation, but most of the accountant's rules conflict directly with the concept of realism.’ Discuss.
Explain why financial reports prepared under the historical cost convention are subject to the following major limitations:● inventory is undervalued● the depreciation charge to the income
Explain how each of the limitations in question 11 could be overcome.
In April 2000 the G4 !1 Group acknowledged that market exit value is generally regarded as the basis for fair value measurement of financial instruments and was discussing the use of the deprival
Shower Ltd was incorporated towards the end of 20X2, but it did not start trading until 20X3. Its historical cost balance sheet at 1 January 20X3 was as follows:All the company’s transactions are
The finance director of Toy plc has been asked by a shareholder to explain items that appear in the current cost income statement for the year ended 31.8.20X9 and the balance sheet as at that
The balance sheets of Parkway plc for 20X7 and 20X8 are given below, together with the profit and loss account for the year ended 30 June 20X8.1 The freehold land and buildings were purchased on 1
Raiders plc prepares accounts annually to 31 March.The following figures, prepared on a conventional historical cost basis, are included in the company’s accounts to 31 March 20X5.The inventory
The historical cost accounts of Smith plc are as follows:1 Land and buildings were acquired in 20X0 with the buildings component costing £800,000 and depreciated over 40 years.2 Share capital was
Aspirations Ltd commenced trading as wholesale suppliers of office equipment on 1 January 20X1, issuing ordinary shares of £1 each at par in exchange for cash.The shares were fully paid on issue,
Antonio Rossi set up a part-time business on 1 November 2004 buying and selling second-hand sports cars. On 1 November 2004 he commenced business with $66,000 which he immediately used to purchase
Why is it necessary for financial reporting to be subject to (a) mandatory control and (b) statutory control?
How is it possible to make shareholders aware of the significance of the exercise of judgement by directors which can turn profits of £6m into losses of £2m?
Discuss the main arguments for dispensing with all SSAPs and FRSs.
‘The effective working of the financial aspects of a market economy rests on the validity of the underlying premises of integrity in the conduct of business and reliability in the provision of
To what extent do you think FRSs should take economic consequences into account?
(a) Name four companies that have been the subject of FRRP pronouncements and explain the reason for FRRP involvement.(b) ‘Shorter accounting standards are not a realistic option until both
Explain the main changes to interim reports following the ASB Statement of Best Practice.
‘The most favoured way to reduce information overload was to have the company filter the available information set based on users’ specifications of their needs.’38 Discuss how this can be
Review a SORP and discuss the reasons why existing FRSs need to be supplemented.
‘Quarterly reporting is essential in the interest of transparency and can, therefore, only be beneficial for investors.’ Discuss.
‘Every European company should be required to prepare their financial reports in accordance with an IFRSSE similar in content to the UK’s FRSSE.’ Discuss.
‘Measurement criteria are more important than disclosure requirements for small entities.’Discuss.
Constructive review of the regulators.Required:(a) Obtain a copy of the Financial Reporting Council’s Annual Review.(b) Prepare a profile of the members of the Financial Reporting Council, the ASB
‘Standardisation is the only way forward for European financial reporting.’ Discuss this statement in the light of efforts that have already been made in the harmonisation of company law and the
Suggest criteria that could be used to classify systems of financial reporting employed in different countries. What difficulties are there in performing an exercise of this nature?
Consider the role of scandal in the development of accounting regulation. Compare the reaction to the Enron financial statements in the early part of the twenty-first century with the reaction to the
Use the EDGAR service (via the SEC website) to identify four European companies listed on the US Stock Exchange. From the Form 20-F identify which items feature in the reconciliation from net income
(a) Name the user groups and information needs of the user groups identified by the IASC Framework for the Presentation and Preparation of Financial Statements.(b) Discuss the effect of the Framework
Give a brief synopsis of the ICAS Making Corporate Reports Valuable.
(a) In 1999 in the UK, the ASB published the Statement of Principles. Explain what you consider to be the purpose and status of the Statement.(b) Chapter 4 of the Statement identifies and defines
of the Statement states that matching is not regarded as the driver of the recognition process. Explain what is meant by this and its probable effect in practice.5 ‘The replacement of accrual
Financial accounting theory has accumulated a vast literature. A cynic might be inclined to say that the vastness of the literature is in sharp contrast to its impact on practice.(a) Describe the
The President of the ICAEW has proposed that regulators from developed and developing countries start talking to agree a set of principles for universal application that could underpin the regulation
A company contemplates purchasing a machine that will generate an income of £25,000 per year over each of the next five years. A scrap value of £2,000 is anticipated on disposal. How much would you
Discuss the arguments for and against revaluing fixed assets and recognising the gain or loss.
(a) ‘Measurement in financial statements’, Chapter 6 of the ASB’s Statement of Principles, was published in 1999. Amongst the theoretical valuation systems considered is value in use –more
The following information relates to Ozone Ltd at 1 January 20X0:Required:(a) Using Hicks’s concept of income:(i) calculate the budgeted income for the year;(ii) calculate the actual income for the
‘Yuji Ijiri rejects decision usefulness as the main purpose of accounting and puts in its place accountability. Ijiri sees the accounting relationship as a tripartite one, involving the accountor,
Discuss the extent to which you consider that accounts for a small businessperson who is carrying on business as a sole trader should be prepared on a cash flow basis.
Explain why your decision in question 3 might be different if the business entity were a mediumsized limited company.Question 3Discuss the extent to which you consider that accounts for a small
‘Realised operating cash flows are only of use for internal management purposes and are irrelevant to investors.’ Discuss.
Jane Parker is going to set up a new business on 1 January 20X1. She estimates that her first six months in business will be as follows:(i) She will put £150,000 into a bank account for the firm on
Mr Norman set up a new business on 1 January 20X8. He invested £50,000 in the new business on that date.The following information is available.1 Gross profit was 20% of sales. Monthly sales were as
The Framework for the Preparation and Presentation of Financial Statements identified seven user groups: investors, employees, lenders, suppliers and other trade creditors, customers, government and
would be most useful to each of these seven groups if they could only receive one statement.2 ‘Accrual accounting is preferable to cash flow accounting because the information is more relevant to
‘Information contained in a profit and loss account and a balance sheet prepared under accrual accounting concepts is factual and objective.’ Discuss.
‘Accountants preparing financial statements in the UK do not require a standard such as IAS 18 Revenue.’ Discuss.
Explain the revenue recognition principle and discuss the effect of alternative treatments on the reported results of a company.
The annual financial statements of companies are used by various parties for a wide variety of purposes. For each of the seven different ‘user groups’, explain their presumed interest with
Jane Parker is going to set up a new business in Bruges on 1 January 20X1. She estimates that her first six months in business will be as follows:(i) She will put 150,000 into the firm on 1 January
Mr Norman is going to set up a new business in Singapore on 1 January 20X8. He will invest $150,000 in the business on that date and has made the following estimates and policy decisions:1 Forecast
The Piano Warehouse Company Limited was established in the UK on 1 January 20X7 for the purpose of making pianos. Jeremy Holmes, the managing director, had 20 years’ experience in the manufacture
The following is an extract from the Financial Reporting Review Panel website (www.frrp.org.uk)relating to the Wiggins Group showing the restated financial results.Revenue recognition The 1999
The following is an extract from the notes to the 1999 consolidated financial statements of the Chugoku Electric Power Company, Incorporated.Equity method Investments in four (three in 1998)
IAS 28, para. 17, states:The recognition of income on the basis of distributions received may not be an adequate measure of the income earned by an investor on an investment in an associate. Explain
How can different relationships between a parent operation and its controlled foreign operation affect the treatment of exchange profits or losses in the consolidated financial statements? Why should
In the 1999 Annual Report and Accounts of Associated British Ports Holdings plc, the directors report earnings per share — basic, and earnings per share — underlying, as follows:Reconciliation of
The following note appeared in the 2002 Annual Report of Mercer International Inc.For 2002 and 200! options and warrants were not included in the computation of diluted earnings per share because
Income smoothing describes the management practice of maintaining a steady profit figure.(a) Explain why managers might wish to smooth the earnings figure. Give three examples of how they might
Showing 200 - 300
of 794
1
2
3
4
5
6
7
8