Question

1)Accounting information is like an ocean, the use of each information may not be same for all the stakeholders. Each stake holders is interested in knowing information which is favorable for them. All accounting information has some uses for decision making.

a)       List down the names of ten different users of accounting information.  

b)      Write down any three reasons, for each of the above mentioned users, who make use of the accounting information?   

2).Heavy Motors Inc. is doing good business in automobile sector in the middle east. The profit as rose over the period of past ten years. The company’s policy aims at delivering best product and after sales service to the customers. The company is has achieved its aims well. But, the employee satisfaction survey has revealed a down trend as the employees are not satisfied with work style. The company has focused more on the main objective of customer satisfaction. However, other areas towards stakeholders are not given much care.

Due to regular complaints from the employee cell, the directors have decided the need to revive the company working approach towards stakeholders. As the success of the business is not only on sales and high profits, other factors do add weight age in the development of the company good will and performance. You are appointed, as an expert to guide company with core areas in which company should focus which will enable to the company to become a good corporate citizen.

a)      Do you agree that good corporate governance affects the financial performance? Elaborate you answer with relevant examples.   

b)     In the above case, which core principles, will enable the business to become a better corporate?   

3).Research is conducted to resolve problem and find solutions. In accounting, research can be conducted in several areas to solve several accounting issues. Considering each and every areas of accounting you need to highlight the keys problems which may arise in each area and how would solve those problem.

a)      Discuss the problem which may arise in accounting information system  

b)      What problem may arise in management accounting area?

c)      Identify the problem which may be arising in financial accounting?   

d) How would you give solutions to the above mentioned problem?

4).Accounting information is used by different category of users for making decision. Information without authenticity does not serve any purpose. There are different internal and external users, who make use of accounting information from various branches of accounting for making decision.                                                                                                                        

a) In the business how is material information different from immaterial information?

b) You are required to discuss about different material information which are NOT a part of balance sheet, income statement and cash flow. But a business should disclose to the users.

c) Discuss the use of accounting information of different branches to different user.

5).Ethics and accounting are two sides of a same coin. Given below are the different situations based on ethics and accounting. You are expected, to provide your opinion on the following situations:

a) Do you think in the absence of auditing; the business should follow ethics?

b) Does ethics has any impact on the financial performance of the business?

c) Do you agree that traditional business practices were more ethical than modern business?

Answer 1

1)

Accounting information is very important for the people who are interested in the company. Accounting information plays a big role in decision making process.

a) Names of ten different users of accounting information as follows:

We can divide users of accounting information into two parts (i) Internal Users and (ii) External Users

Internal Users

1. Owners

2. Management

External Users

3. Investors

4. Suppliers

5. Government Agencies

6. Lenders

7. Customer

8. General Public

9. Employees

10. Auditors

b) Three reasons to make use of the accounting information:

Owners

1. To know what they have earned or lost during a period of time.

2. To decide whether the business will be expanded in future if more profitable or vice a versa.

3. To know whether the business required more investment.

Management

1. To improve the performance of business by taking appropriate decision and action

2. To know the financial position of business

3. To set guidelines, budget and responsibilities

Investors

1. To know the performance of business because they are the person who investment their capital in the business.

2. To know the profitability and growth of the business

3. Potential investors required accounting information to decide whether or not they want to investment in the company

Suppliers

1. To know whether the company is able to pay their outstanding amount on account of supplying raw materials on credit.

2. To decide whether the supplier continue to supply the raw materials to the company on the basis of financial position of company.

3. To know the creditworthiness of company and their financial liabilities.

Government Agencies

1. To impose taxes

2. To intrude regulations on the business

3. To know whether the company calculated & pay the correct tax.

4. To know the books of accounts are prepared based on the law and regulations

Lenders (the person who give money to business)

1. To know the interest and income of the company

2. To asses the financial position of company because they want to assure their return on lending the money to business.

3. To know the ability of company to pay interest on their money

Customer

1. To know the current position of the organization.

2. To know whether the company is able to supply the material to them to support their sales of goods or services.

3. To ensure the consistent supply of material.

4. To know the continuous availability of product

General Public

1. To use the accounting information as source for student of finance and accounting

2. To look job opportunity in the company.

3. To know the future of a company

Employees

1. To know whether the company is a profit generating company because their present and future is with the success of company.

2. To ensure the job security

3. To know the profitability or better remuneration and benefits

Auditors

1. To know whether the accounts show true and fair view.

2. To audit the books of accounts

3. To ensure the correctness of account.

Hope the above calculations, working and explanations are clear to you and help you to understand the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Pls ask separate question for other parts problems