AIM Homework Solutions Week 3

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200101Autumn 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

Page 2 Accounting Program, School of Business

Contact Details

Mrs Susan Green (Unit Administrator)

Building EQ Parramatta CampusPhone: 9685 9207 Fax: 9685 9593 Email: [email protected] [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:

[email protected] ; Phone: 9685 9215 Mob: 0419 291 606

vUWS Coordinator Simon Lenthen : Vernon Bldg (ED), Room: ED.G.11 Parramatta Campus; Email:[email protected] Phone: 9685 9476 Mob: 0414 325 676

mailto:[email protected]








Autumn 2012 200101 Accounting Information for Managers

Accounting Program, School of Business Page 3

Schedule of learning activities

Week No.Date

Text Reference / Lecture Topic/ LearningOutcomes (LO)ª

Tutorial Homework*

127 February-2March

Introduction to accounting (Chapter 1).Business structures (Chapter 2).

Read learning guide and unit outline.Complete handout in class for Week 1.

25-9 March

Ethics and corporate governance(Chapter 3).Business transactions (Chapter 4).

Study guide: Chapter 1 (C2, C3, C4) andChapter 2 (E1, E4, E5).

Textbook: Chapter 1 (D1.7) and Chapter 2(E2.15, E2.16a, E2.17a, P2.7).

312-16 March

Business transactions (Chapter 4). Study guide: Chapter 3 (C3, E1, E4) andChapter 4 (C3).

Textbook: Chapter 3 (D3.10, D3.12,D3.27) and Chapter 4 ( P4.3).

419-23 March

The balance sheet (Chapter 5, pp. 138-163).

Study guide: Chapter 4 (E1, E5 a-e). Textbook: Chapter 4 (E4.7, E4.8, P4.4,P4.12).

526-30 March

Note: No lectures or tutorials this week.Staff will be available for additionalconsultation – see vUWS for details.

Due: Mid-semester examination onSaturday, 31 March 2012.Note: Check vUWS site closer to the datefor further details.

62-6 April

The balance sheet cont. (Chapter 5, pp.164-174).

Study guide: Chapter 5 (C1, E2a-c). Textbook: Chapter 5 (E5.10, E5.11,E5.13, E5.14).

79-13 April

Income statement and statement of changes in equity (Chapter 6).

Time available in tutorial to work ongroup assignment.

Study guide: Chapter 5 (MC1-15, E4, E5). Textbook: Chapter 5 (D5.9, D5.10, P5.2,P5.5).

816-20 April INTRA SESSION BREAK INTRA SESSION BREAK

923-27 April

The cash flow statement (Chapter 7). Study guide: Chapter 6 (complete thesentence activity on p. 106, C2, E1).

Textbook: Chapter 6 (D6.5, D6.8, E6.1,E6.2, E6.5, E6.11, P6.2).

1030 April-4 May

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

Study guide: Chapter 7 (MC1-15, C2). Textbook: Chapter 7 (D7.2, D7.6, E7.2,E7.3, E7.9, E7.20, P7.2).

117-11 May

Financial statement analysis (Chapter 8,pp. 322-42).

Study guide: Chapter 8 (C1, C2, E1). Textbook: Chapter 8 (D8.3, D8.10, E8.6,E8.10, P8.1).

1214-18 May

Budgeting (Chapter 9). Study guide: Chapter 8 (MC1-15, E3, E4,E5).

Textbook: Chapter 8 (D8.8, E8.7, E8.14,P8.7).

1321-25 May

Cost-volume-profit analysis (Chapter10).

Study guide: Chapter 9 (C2, E1, E2). Textbook: Chapter 9 (D9.7, D9.8, E9.2,E9.9, P9.7).

1428 May-1 J une

Review lecture. Study guide: Chapter 10 (C2, C3, C4, E1). Textbook: Chapter 10 (D10.2, E10.2,E10.3, E10.7, E10.13, P10.5).

ª Refer to learning outcomes on page 3

* Ch = Chapter, MC= Multiple Choice, C = Classification questions, D = Discussion questions, E = Exercises, P = Problems





Week 3 In-Class Seen Solutions

Chapter 4

3.10 What are the four key responsibilities of business? Do you think an entityshould consider discretionary responsibilities? Why?

According to Carroll, there are four key responsibilities of business whichare economic, legal, ethical and discretionary. Organisations have aneconomic 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 areethically responsible to act the way society would expect. Discretionaryresponsibilities are carried out voluntarily. For instance, there may be nolaws relating to the maximum volume of effluent discharge, but a companymay choose to monitor and limit its discharge because society expects it to.It is an ethical responsibility. However, the firm may also choose to changeequipment 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 legalresponsibilities. If organisations don’t address their pollution problems thenthe government will step in and regulate it.

Whether or not you feel that firms should consider discretionaryresponsibilities depends on your view as to the objective of a firm. Asdiscussed in the chapter, some believe that a firm only has a duty to itsshareholders, 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 firmhas a responsibility to consider discretionary responsibilities.





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

An example of an approach to the principles of good corporate Governancecan be seen in the Australian Stock Exchange (ASX) CorporateGovernance principles and recommendations 2 nd edition , and are:

1. Lay solid foundations for management and oversight2. Structure the board to add value3. Promote ethical and responsible decision making4. Safeguard integrity in financial reporting5. Make timely and balanced disclosure

6. Respect the rights of shareholders7. Recognise and manage risk 8. Remunerate fairly and responsibly





P4.3 Preparing a worksheet

Enter the following transactions for the month of March 2011and calculate the net profit or loss for the period.

Date Transaction

March3

Injected capital to commence business $35 000

4 Purchased office stationery $450

7 Received cash fees $6008 Took out a loan from St William

Bank $9 000

8 Paid two weeks’ rent in advance$900

10 Purchased on credit office suite of

furniture $21 00012 Invoice a client for services $850

17 Paid wages to secretary $490

27 Invoiced a client $450





Solution

*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

DateMarch2011

Cash AccountsReceivable

OfficeStationery*

OfficeFurniture

AccountsPayable

Loan Capital Profitandloss

3 35 000 35 0004 –450 4507 600 6008 9 000 9 0008 –900 -90010 21 000 21 00012 850 85017 –490 –49027 450 450

Totals 42 760 1300 450 21 000 21 000 9 000 35 000 510(profit)





Week 3 – Homework SolutionsSolutions 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 thisstatement.

Ethics and the law are related but they are not the same thing. Law is about what actions arelegal, 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 Carroll’s four key responsibilities of business (economic, legal, ethical and discretionary). Specifically, consider the legal and ethicalresponsibilities. Legally, businesses are required to uphold the laws of government and areethically responsible to act the way society would expect. For instance, there may be no lawsrelating 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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AIM Homework Solutions Week 3