ACCOUNTING – WEEK 2 HOMEWORK EXERCISES

Readings on Blackboard:

 Chapter 17 Accounting (Horngren et al.,) on Blackboard – pp749-762.

 Framework for the Preparation and Presentation of Financial Statements – on Blackboard.
Here is the link also:
http://www.aasb.gov.au/admin/file/content105/c9/Framework_07-04_COMPdec07_01-
09.pdf

BSB110 Accounting Textbook - Chapter 1 – Pages 1-17

Read Sections 1.2, 1.4, 1.6, 1.7 and 1.8.

Homework Questions

 Reading – Chapter 17 Horngren, et al. on Blackboard

Answer the following questions:

Multiple choice questions:

Q1 Accounting standards in Australia are issued by:

 The Australian Securities and Investments Commission

 The Financial Accounting Standards Board
 The Australian Accounting Standards Board
 The International Accounting Standards Board

Q2 The qualitative characteristics of financial reports do NOT include which of the following:

 Relevance
 Timeliness
 Comparability
 Understandability

Q3 As a financial analyst with an investment advisory firm, your job is to follow the construction
industry. In particular, you compare different firms in this industry to recommend to clients which
firms to invest in.
 Requirements:

they need to check, like changes in prices, investments in items or even the time, are essentially
influenced to allow the company look for more ideas and make more good decisions happen, otherwise
Without having any interest or importance of how a business is going to work (lack of relevance),
economical information would be not necessary.

Initiative to buy it

Cheaper prices

Convenience

Easy use

Additional Exercise:

Show the effect on the accounting equation of the following transactions

(use the lecture example as a guide)

o Tanya opens a bank account and puts $5000 into it to start her jewellery making business.
o She makes cash sales (revenue) of $500
o She has expenses paid in cash of $100
o She buys a polishing machine for $2,000 cash
o She withdraws $400 for her own use

Assets = liabilities+ owners’ equity

5000 100 500

500 2000

100 400

2000

400

owners’ equity=assets-liabilities
 500 8000-2500=5500

Where 5500-500 is the same amount of money that Tanya had invested at the beginning (5000 )