11.(5marks) Your old school friend has joined the maintenance group of a large airline. He asks you the following question: (1) Our customers pay us large amounts of cash but we call this a liability. Surely it has to increase profits? (2) Accountants use a dual standard for measuring assets. Some are on the balance sheet because they have real future economic value. Others are there only because they're left over from the profit measurement process - sort of expenses waiting to be deducted. Similarly, with liabilities: some are really owed but some are just leftovers of the accrual accounting process for measuring profit. How would you answer? You can discuss these problems using some examples. 12.(5 marks)A businessperson you know has just received the financial statements of a company in which that person owns shares. Answer the following questions asked by the person. Try to answer without jargon, and use examples that will make your answers clear. (1) 'I've been told that these accrual accounting numbers are mainly a matter of timing. What does that mean?" (2) 'I know from my business experience that sometimes you collect cash sooner or later than you expect. Customers may have cash, or not, for all sorts of reasons that have nothing to do with you. I understand that accrual accounting takes this into account so that it doesn't matter when cash is collected, you get the same revenue figure anyway. Is this true?' 13. (5 marks) Do liabilities always involve future payments of cash? 14. (5 marks) The CEO of a large Australian company announced at a recent shareholders' meeting: "Our people are our greatest assets.' If this is the case, why are they not included in the balance sheet? 15. (5 marks) Financial reports are no longer timely today.' Discuss. 16. (5 marks) Provide an indicator of whether a company is financially sound