Accounting Information for Managers

200101
Autumn 2012

Tutor Solutions Week 3

Copyright The University of Western Sydney, 2012 No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without the prior written permission from the Head of School, School of Accounting. Copyright for acknowledged materials reproduced herein is retained by the copyright holder. All readings in this publication are copied under licence in accordance with Part VB of the Copyright Act 1968.

200101 Accounting Information for Managers

Autumn 2012

Contact Details
Mrs Susan Green (Unit Administrator) Building EQ Parramatta Campus Phone: 9685 9207 Fax: 9685 9593 Email: business.courses@uws.edu.au [Sue is normally in the office each week on Monday to Thursday inclusive] Unit Coordinator Graeme Mitchell: Vernon Bldg (ED), Room ED.G.212 Parramatta Campus; Email: g.mitchell@uws.edu.au; Phone: 9685 9215 Mob: 0419 291 606 vUWS Coordinator Simon Lenthen: Vernon Bldg (ED), Room: ED.G.11 Parramatta Campus; Email: s.lenthen@uws.edu.au Phone: 9685 9476 Mob: 0414 325 676

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Accounting Program, School of Business

Autumn 2012

200101 Accounting Information for Managers

Schedule of learning activities

Week No. Date 1 27 February-2 March 2 5-9 March Text Reference / Lecture Topic/ Learning Outcomes (LO) Introduction to accounting (Chapter 1). Business structures (Chapter 2). Ethics and corporate governance (Chapter 3). Business transactions (Chapter 4). Business transactions (Chapter 4). Tutorial Homework* Read learning guide and unit outline. Complete handout in class for Week 1. Study guide: Chapter 1 (C2, C3, C4) and Chapter 2 (E1, E4, E5). Textbook: Chapter 1 (D1.7) and Chapter 2 (E2.15, E2.16a, E2.17a, P2.7). Study guide: Chapter 3 (C3, E1, E4) and Chapter 4 (C3). Textbook: Chapter 3 (D3.10, D3.12, D3.27) and Chapter 4 ( P4.3). Study guide: Chapter 4 (E1, E5 a-e). Textbook: Chapter 4 (E4.7, E4.8, P4.4, P4.12). Due: Mid-semester examination on Saturday, 31 March 2012. Note: Check vUWS site closer to the date for further details. Study guide: Chapter 5 (C1, E2a-c). Textbook: Chapter 5 (E5.10, E5.11, E5.13, E5.14). Study guide: Chapter 5 (MC1-15, E4, E5). Textbook: Chapter 5 (D5.9, D5.10, P5.2, P5.5). INTRA SESSION BREAK Study guide: Chapter 6 (complete the sentence activity on p. 106, C2, E1). Textbook: Chapter 6 (D6.5, D6.8, E6.1, E6.2, E6.5, E6.11, P6.2). Study guide: Chapter 7 (MC1-15, C2). Textbook: Chapter 7 (D7.2, D7.6, E7.2, E7.3, E7.9, E7.20, P7.2). Study guide: Chapter 8 (C1, C2, E1). Textbook: Chapter 8 (D8.3, D8.10, E8.6, E8.10, P8.1). Study guide: Chapter 8 (MC1-15, E3, E4, E5). Textbook: Chapter 8 (D8.8, E8.7, E8.14, P8.7). Study guide: Chapter 9 (C2, E1, E2). Textbook: Chapter 9 (D9.7, D9.8, E9.2, E9.9, P9.7). Study guide: Chapter 10 (C2, C3, C4, E1). Textbook: Chapter 10 (D10.2, E10.2, E10.3, E10.7, E10.13, P10.5).

3 12-16 March

4 19-23 March 5 26-30 March

The balance sheet (Chapter 5, pp. 138163). Note: No lectures or tutorials this week. Staff will be available for additional consultation see vUWS for details. The balance sheet cont. (Chapter 5, pp. 164-174). Income statement and statement of changes in equity (Chapter 6). Time available in tutorial to work on group assignment. INTRA SESSION BREAK The cash flow statement (Chapter 7).

6 2-6 April 7 9-13 April

8 16-20 April 9 23-27 April

10 30 April-4 May 11 7-11 May 12 14-18 May

Financial statement analysis (Chapter 8, pp. 303-22) Due: Group assignment. Financial statement analysis (Chapter 8, pp. 322-42). Budgeting (Chapter 9).

13 21-25 May 14 28 May-1 June

Cost-volume-profit analysis (Chapter 10). Review lecture.

Refer to learning outcomes on page 3 * Ch = Chapter, MC= Multiple Choice, C = Classification questions, D = Discussion questions, E = Exercises, P = Problems

Accounting Program, School of Business

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200101 Accounting Information for Managers

Autumn 2012

Week 3 In-Class Seen Solutions

Chapter 4 3.10 What are the four key responsibilities of business? Do you think an entity should consider discretionary responsibilities? Why? According to Carroll, there are four key responsibilities of business which are economic, legal, ethical and discretionary. Organisations have an economic responsibility to provide goods and services at a fair price, to repay their creditors and to seek a reasonable return for their shareholders. Legally, they are required to uphold the laws of government and are ethically responsible to act the way society would expect. Discretionary responsibilities are carried out voluntarily. For instance, there may be no laws relating to the maximum volume of effluent discharge, but a company may choose to monitor and limit its discharge because society expects it to. It is an ethical responsibility. However, the firm may also choose to change equipment and processes so that there is no discharge at all and this would be classed as a discretionary responsibility. Over time, discretionary responsibilities may become ethical responsibilities or even legal responsibilities. If organisations dont address their pollution problems then the government will step in and regulate it.

Whether or not you feel that firms should consider discretionary responsibilities depends on your view as to the objective of a firm. As discussed in the chapter, some believe that a firm only has a duty to its shareholders, while others believe that a firm has a wider responsibility to all stakeholders. Some reasons put forward why firms consider social and environmental issues are:

economically in their best interest (has a benefit to the bottom line profit) to minimise government interference enlightened self interest genuinely want to do the right thing. So, depending on what you believe will determine whether or not a firm has a responsibility to consider discretionary responsibilities.

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Accounting Program, School of Business

Autumn 2012

200101 Accounting Information for Managers

D3.27 Outline the Principles of Good Corporate Governance and Best Practice Recommendations.

An example of an approach to the principles of good corporate Governance can be seen in the Australian Stock Exchange (ASX) Corporate Governance principles and recommendations 2nd edition , and are: 1. 2. 3. 4. 5. 6. 7. 8. Lay solid foundations for management and oversight Structure the board to add value Promote ethical and responsible decision making Safeguard integrity in financial reporting Make timely and balanced disclosure Respect the rights of shareholders Recognise and manage risk Remunerate fairly and responsibly

Accounting Program, School of Business

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200101 Accounting Information for Managers

Autumn 2012

P4.3 Preparing a worksheet Enter the following transactions for the month of March 2011 and calculate the net profit or loss for the period.

Date March 3 4 7 8 8 10 12 17 27

Transaction Injected capital to commence business $35 000 Purchased office stationery $450 Received cash fees $600 Took out a loan from St William Bank $9 000 Paid two weeks rent in advance $900 Purchased on credit office suite of furniture $21 000 Invoice a client for services $850 Paid wages to secretary $490 Invoiced a client $450

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Accounting Program, School of Business

Autumn 2012

200101 Accounting Information for Managers

Solution Date March 2011 3 4 7 8 8 10 12 17 27 Totals Cash Accounts Receivable Office Stationery* Office Furniture Accounts Payable Loan Capital Profit and loss

35 000 450 600 9 000 900 850 490 42 760 450 1300

35 000 450 600 9 000 -900 21 000 21 000 850 490 450 510 (profit)

450

21 000

21 000

9 000

35 000

*Note Office Stationery is normally treated as an Asset in the Balance Sheet. When stationery is used, a determined amount is taken out of Assets and recorded as an expense on the Income Statement(i.e., -Office Stationery, Asset; +Stationery Expense). Under the principle of Materiality, sometimes offices supplies and stationery is expensed when purchased. For the purpose of unit 200101 AIM office supplies purchased are to be treated as an asset until used

Accounting Program, School of Business

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200101 Accounting Information for Managers

Autumn 2012

Week 3 Homework Solutions

Solutions to the Study Guide Questions can be found in the Study Guide

Chapter 3
3.12 Complying with the law will always mean that you are acting ethically. Discuss this statement. Ethics and the law are related but they are not the same thing. Law is about what actions are legal, not particularly what is ethical. Justice may or may not be seen to be done in a court of law.

A good way of thinking about this is by considering Carrolls four key responsibilities of business (economic, legal, ethical and discretionary). Specifically, consider the legal and ethical responsibilities. Legally, businesses are required to uphold the laws of government and are ethically responsible to act the way society would expect. For instance, there may be no laws relating to the maximum volume of effluent discharge but a company may choose to monitor and limit its discharge because society expects it to. It is an ethical responsibility.

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Accounting Program, School of Business