Question 6:

Part 1: Define a trial balance. Identify three errors that would not be detected by a trial balance.

Part 2: To be judged useful financial information should possess the fundamentals qualitative characteristics of financial reporting.

(a) Identify these qualitative characteristics.

(b) explain two fundamental characteristics.

Part 3: Claire has just graduated with a master degree in accounting and found a job as a financial accountant in ADL Ltd. Claire's responsibility include preparing monthly income statements and presenting the statements to the board of directors.

During her first week, Claire noticed that the cashier, Christina secretly taking several $100 notes from the cash till drawer and giving them to Peter, the Finance Director.When confronted by Claire, Christina said that Peter's son has been suffering from late stage cancer and Peter's salary can no longer afford the hospital fees. She also mentioned that she has been helping Peter with the till money for 6 months and that if anyone finds out, then both of them will lose their jobs. Christina begged Claire to record the missing amount as a general office expense so that Peter's son can continue to receive medical treatments.

Required:

Discuss Claire's appropriate response to the situation above with reference to two fundamental principles of ethical behaviour in the accounting profession.