QUESTION 1 (word count: approx. 350)

Ashley used to be a clerk for a small business.She has only ever used single entry accounting.She has recently got her first job in the accounts section of a medium sized company.On 31January the company deposited $2 million into a 6 month 6%pa term deposit with ANZ Bank.The deposit does not mature until 31 July.Ashley has been asked to prepare the balance day adjustment to accrue the interest receivable.She has come to you for help with this.

Required:

1. Show Ashley what the journal for the balance day adjustment should be (include narrations).
2. Explain to Ashley what accrual accounting is AND why this journal is necessary.
3. Explain to Ashley
4. how single entry bookkeeping is an incomplete accounting system and
5. what the key principles of double entry bookkeeping are and
6. why a company MUST adopt these principles.

QUESTION 2 (word count: approx. 400)

Your friend Shane has come to you asking for advice.He is starting a business and has several questions he wants answered.Prepare a report to Shane that advises him as to the following matters:

1. He has chosen a company structure, expects gross revenue of $5 million in his first year and expects to have 13 employees.Advise Shane if he will be a large or small company and why.Ensure you make reference to the relevant legislation.
2. He already has a personal Tax File Number.Advise Shane if the company will need another one, or can he just use his own?
3. Identify AND explain three (3) current financial legislation and statutory requirements that relate to the reporting requirements for Shane's company.
4. Explain to Shane what General Purpose Financial Reports (GPFR) is and how they differ from Special Purpose Financial Reports (SPFR).
5. Explain to Shane what the two Tiers (tier 1 and tier 2) of GPFR refer to.Is this relevant to his company? Yes/No?Why?

QUESTION 3 (word count: approx. 100)

Case study:ASIC v ADLER

In 2003 ASIC commenced proceedings against three directors of HIH Limited for an alleged breach of directors' duties.The three directors were Rodney Adler, Ray Wiiliams and Dominic Fodera.The transaction in question was $10 million which was paid by a subsidiary company of HIH to a company effectively controlled by Adler.

Required:

Research the above case then identify AND discuss the breaches of Directors' Duties in this case with particular reference to conflict of interest and disclosure requirements (remember to make reference to relevant legislation).

QUESTION 4 (word count: approx. 100)

When directors are privy to confidential information that has not yet been made available to the public there is a possible temptation to benefit from "Insider Trading".

Required:

What is Insider Trading (ensure you make reference to relevant legislation)?Discuss the ethical considerations of insider trading.