Week 1

Accounting exists primarily to help user​ -

decision making

What are the two fundamental qualities of accounting information

faithful representation and relevance

The higher the level of risk, the higher the expected return from an investment

True

The various groups seeking access to the financial reports of a business are normally referred to as:

User-groups

Accounting information is - when various, independent experts are able to reach a consensus that it provides a faithful portrayal

Verifiable

1. The only purpose of accounting is to prepare financial reports. 2. Only accounting information can provide decision-making support

1. False 2. False

How should managers deal with risk when settling objectives

Balance it against likely returns

Accounting can only be useful if it is capable of affecting people's

Behaviour

1. Businesses tend to produce accounting information that exceeds the minimum requirements required by accounting regulations. 2. Accounting reports are usually designed to be understood by everyone.

1. True 2. False

The texts states that accounting is concerned with collecting, - and - financial information

Analysing and communicating

Deciding whether to produce an item of accounting information is a question of balancing the - against the -

Benefits against the costs

Which one of the following qualities is most concerned with influencing users' decisions concerning the prediction of future events and the confirmation of past events

Relevance

The various user groups for accounting information use that information in different ways. Match the user group shown in the left column with the corresponding usage shown in the right​ column, choosing the appropriate letter in the​ drop-down menu.

Customers-Are there sufficient financial resources to complete an​ order? Competitors-How well is the opposition​ doing? Employees-Can the business continue to offer​ employment? Government-Is there tax due on business​ profits? Suppliers-Can the business pay for goods bought on​ credit? Lenders-Can the business repay loans and​ interest? Owners-Should more shares be​ bought, or should some be​ sold? Managers-How can the business become more financially​ efficient? Investment analysts-Should they advise clients to buy or sell​ shares? Community representatives-What impact does the business have on the​ environment?

The study of business investments and financing decisions is known as:

Financial management

Which area of study is most closely associated with acquiring and deploying the short term and long term finance required by a business

Financial management

In recent decades, which one of the following has not resulted in the business environment becoming more turbulent and competitive?

Increasing regulation of domestic markets

Which one of the following is an internal user of financial information

Management

Which user group usually has most control over the range and content of information if receives

Managers

To be relevant, accounting information must cross a threshold of -

Materiality

Which one of the following is not an element of the quality of faithful representation

Materiality

Which of the following changes have occurred to management accounting as a result of changes in the competitive environment i. More outward-looking ii. More concerned with finding new ways to managing costs iii. More subject to external regulation

More outward-looking and more concerned with finding new ways of managing costs

One purpose of accounting information is to help certain users assess how effectively the managers are running the business and to make judgements about likely levels of risk and return in the future. Which user group is most likely to use accounting information for this​ purpose?

Owners

Accounting information should be produced until the point where -

The cost of providing it is no longer less than the benefits