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ACCY 111 Maria Colls Tutorial #1

Tutorial 1: Users & Uses of Accounting; Ethical Decision Making

Maria Colls | Student ID: 300503727 | ACCY 111

Question 1 – Users

Different entities have different users of their accounting information. Find a company listed
on the NZX and a PBE, and complete the table below to answer each of the following sub-
1. Provide an example of each type of entity (must be a NZ example).
2. Identify at least three (3) different users of each entity’s accounting information.
3. For each user you identified, provide one (1) example of what kind of information they
would need from the entity’s financial statements.

Type of Entity NZ example Possible Users What info might this user need?
NZX Listed The Warehouse 1. Investor As an investor, the Statement of
Company Group Limited (external) Changes in Equity would be useful
to analyse as it links the Income
Statement and the Balance Sheets.
From this connection, it can
explain any changes in equity
during the period analysed. The
investor may find viewing the
Balance Sheet useful as it is a
detailed snapshot of the
company’s financial condition.
Viewing the Income Statement wall
indicates whether the entity has
made a profit or loss during the
reported duration. Finally, the cash
flow statements are a good way of
seeing the health of the entity. The
cash flow statement will show the
entities financial health due to the
amount of cash flow moving
through the entity. These
statements are commonly known
as general purpose financial
statements as they have been
prepared for users external to the

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ACCY 111 Maria Colls Tutorial #1

2. Finance The finance manager would

Manager request data in the form of Special
(internal) Purpose Financial Statements.. The
statements prepared would have
been reflective of their specialised
role. These would be in the form of
reports. Such shares, financial
budgets, performance reports,
cost-of-production reports.
Because these reports are made
for internal use, they do not need
to comply with accounting

3. Creditor A creditor would be presented a

(external) General Purpose Financial
Statements, which are made up of
a balance sheet, the Income
Statement, the Statement of Cash
Flows in the Statement of Changes
in Equity. Because these reports
are viewed from users external to
the entity, the reports are required
by regulatory authorities to comply
with accounting standards.
Public Benefit Help Wellington 1. Inland Inland Revenue has issued an
Entity (PBE) Revenue (IRD) audit. It is the responsibility of this
entity to provide a General
purpose financial statements,
which is made up of a balance
sheet, the Income Statement, the
Statement of Cash Flows in the
Statement of Changes in Equity.
They would also be required to
provide any other supporting
documents which would present
an accurate picture of the entity’s
financial situation.

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ACCY 111 Maria Colls Tutorial #1

2. Member of The member of the board may

the Board request a variety of financial
reports, known as, special purpose
financial statements. They may
need a specific report that
generates data for all of the
branches. This data would be
collected from balance sheet, the
Income Statement, the Statement
of Cash Flows in the Statement of
Changes in Equity.
3. Potential As an investor, it would be wise to
Investor analyse all data are available to
them. The four financial
statements, known as the General
Purpose Financial Statements
would be available in the entities
yearly financial report.

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ACCY 111 Maria Colls Tutorial #1

Question 2 – Ethics & Integrity

Case Study
Paul Sarver is the accountant at an unlisted company (i.e. its shares are not traded on a stock
exchange). The company has just received a patent on a product that is expected to yield
substantial profits in a year or two. At the moment, however, the company is experiencing
financial difficulties; and because of inadequate cash flow, is on the verge of defaulting on its
bank loan.
At the end of the most recent financial year, the company’s CEO instructed Sarver not to
record several invoices as accounts payable. Sarver objected since the invoices represented
genuine liabilities (future outgoings). However, the CEO insisted that the invoices not be
recorded until after year-end, when the bank loan was expected to be renewed. After several
very strenuous objections – expressed to both the CEO and other members of senior
management – Sarver finally complied with the instructions.
(adapted from Garrison, Noreen, & Brewer, 2008, p33)

Using one of the theories of ethics outlined in lecture (consequentialism, deontology, virtue-
ethics), explain whether you think what Paul did was ethical or not.

Under the set of these ethics, I feel that Paul ultimately made the right decision. Taking in
consideration that the companies bank loan was on the verge of defaulting, looking at the
long term future of the company, this decision has a far more positive outcome. By holding
back the invoices, this gave the company the opportunity to gain financial stability through
the patient they received.

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