QUESTION 1

You are the Chief Financial Officer and John is the Chief Executive Officer (CEO) of Suzy Ltd, an online fashion retailer with over 200,000 customers.

You have submitted the quarterly sales details to John for his reference. John has limited accounting knowledge and does not understand why you have included an allowance for doubtful debts in the accounts receivable. He has called you to his office to seek clarification about the treatment of Allowance for Doubtful Debts with Accounts Receivable.

Required:

Explain to John, in laymen's terms, why you have included Allowance for Doubtful Debts within the Accounts Receivable.

QUESTION 2

You are the accountant at Mandy Ltd, a furniture manufacturing company. Mandy Ltd has been operating for a year now, and its managing director, Franky, has limited accounting knowledge. You have submitted the first-year financial reports to Franky, and he is a bit concerned that have included 'Inventory' in your calculations of total cash payments made to suppliers during the year.

Required:

You are having a meeting with Franky this afternoon, and need to explain to him, in laymen's terms, why 'Inventory' was considered when calculating 'Cash Payments to Suppliers'.

QUESTION 3

You are the senior accountant at Zoey Courier Ltd, a delivery company, and have submitted the quarterly financial reports to Chloe, the Chief Executive Officer (CEO). Chloe has limited accounting knowledge and does not understand why you would consider depreciation is working out how much cash was earned from selling property, plant, and equipment during the year.

Required:

Explain to Chloe, in laymen's terms, why you have considered depreciation in your calculation of cash received from the sale of property, plant, and equipment.

QUESTION 4

You are the Chief Financial Officer (CFO) of Kylie Ltd and presented the financial reports for the year ending 30 June 2023 to the board of directors. Jane, one of the directors does not understand why the financial reports have been prepared following the requirements of the AASB and Conceptual framework. Jane believes that ASIC is the main regulator, and all financial information should be prepared following the requirements and guidance of ASIC.

Required:

You are having a meeting with the board of directors next week and must explain, in laymen's terms, why you followed the requirements of the AASB and Conceptual framework rather than ASIC's in preparing the financial reports.