Case Scenarios: 1 (Chapter 1)

The majority of business owners, managers and investors want their companys finances and performance to be presented to them through a straight-forward system; they want information to be delivered in a comprehensive, yet understandable way. Accountants can provide such a system; it is usually the product of thought-through applications of theories: Positive and Normative Accounting Theories.

Following accounting experts had been persuaded their views pertaining to application of accounting theories at Muscat Distributors LLC (MDL).

Accounting experts name	Accounting experts view
Ms. Fatma Mohammed	if corporate growth allows a company to increase shareholder dividends over previous dividend payments, this accounting theory would conclude that corporate growth causes a rise in stockholder dividends
Ms. Buthina Balushi	when it comes to signing contracts, when should the costs be accounted for? Straight away when signing, in a lump sum at a later date, or over a period of months in installments? Depending on the contract, business, and services and products provided, all three answers could be correct
Mr. Arul Ubaith	the theory posits that, because companies are fundamentally about the contracts that dictate its business, a core driver of company success is efficiency. That means minimizing the costs of its contracts to unlock the most value from them
Mr. Nahid Nabi	following the crisis when the market for these assets dried up, and accounting policies were changed to require these assets to be "marked to market" -- or revalued -- on each financial statement. That created new unrealized gains and losses for the banks that proved to be a major driver of profit and loss
Mr. Al-Bani Khalid	an accountant will collect and look at real data such as a companys revenue and expenses for the past year, and then derive actionable conclusions based on the financial numbers
Ms. Naima Salim	If the value of an asset has to be radically altered because the traditional methods of analyzing its value using an existing system prove to be incorrect

Select TWO experts from the above list (selections are from your own choice) and identify whether the expert view is pertaining to positive accounting theory or normative accounting theory. Justify your answer with reference to the relevant principles governing the selected theory. (Word count- 900-1000)

Case Scenario: 2 (Chapter 2)

Muscat Distributors LLC (MDL)s financial position as of 28th February 2021 is as follows:

Statement of Finanancial Position

Equity and Liabilities	OMR000	Assets	OMR000
Share capital	18000	Motor Vehicles at NBV* (Cost: OMR 25 000 000)	20000
Bank loan	7000	Inventory : Unsold cars	8000
		Inventory : Spare parts	5000
Net Profits	10000	Other assets	2000
	35000		35000

*NBV: Net Book Value.

The company management has been decided the following creative accounting measures:

a) Currently, MDL depreciates motor vehicles by straight-line method over 5 years. However, the company has decided to change its depreciation policy as straight-line method over 8 years.

b) Inventory: Unsold cars - Increase by OMR 600 000 to represent low provision for damaged cars.

c) Inventory: Spare parts - Decrease by OMR 250 000 to represent obsolete spares.

Task (2)

Redraft the Statement of Financial Position as of 25th February 2021 to reflect the above Creative Accounting measures.