QUESTION ONE: COSTVOLUMEPROFIT (CVP) ANALYSIS

(a) Identify the SIX underlying assumptions of costvolumeprofit (CVP) analysis.

(b) Select ANY THREE assumptions given in (a) and discuss the difficulties that could arise in CVP analysis if these assumptions do not hold.

QUESTION TWO: PUTTING ACCOUNTING DECISIONS IN CONTEXT

(a) Describe TWO financial and TWO non-financial performance indicators which may be useful for users of the reports of a public benefit entity (e.g. a museum).

(b) If you were a member of the governing body of a public entity body, which ONE of the performance indicators described in (a) would you regard as the most useful to evaluating the entitys success? State the reasons for your choice.

QUESTION THREE: FINANCIAL REPORTING AND PROFESSIONAL JUDGEMENT

Explain why the figures in financial statements are sometimes disputed even though reporting entities comply with accounting standards in the preparation of financial statements.