Tutorial 1 solutions
ACCY111
TUTORIAL 1
Solutions
John Wiley & Sons Australia, Ltd 2012
Page 1 of 19
CHAPTER 1
DECISION MAKING AND THE ROLE OF THE ACCOUNTANT
Exercise 1.1
Information for decisions
ASHLEY BUTLER
Ashley Butler, as the accounts supervisor, should obtain information about the account applicant to ascertain whether or not the person will be able to pay their account. In deciding to open an account, the following would be required:
Information requested
1. Customer’s business name, address and contact details
Type of information (economic / other)
Other – details ensure business exists and invoices can be posted to the correct address
2. Years customer has been in this business
Other – establishes track record and history
3. Total assets and estimates of values of assets in the business
Economic – establishes size of asset base of business 4. Total liabilities (total commitments)
Economic – establishes how much the business currently owes others to assess the extent of claims against assets
5. Profits of the business for the most recent and previous periods
Economic – used to assess whether the business generates sufficient profits to cover the payments that will have to be made of their account
6. Credit references
Other – enables Ashley to follow up with other businesses the customer already has accounts with, to assess whether the customer has paid their accounts in time and in full
7. Details of any collateral or security that can be provided should the customer default on their payments
Economic and other - Ashley will want to ensure that the business will be able to recover any unpaid amounts by claiming from a third party or having a claim over the assets of the business
Page 2 of 19
Exercise 1.7
Factors in making a government decision
Consult the relevant business journal or newspaper article and identify the facts of your case involving an important government decision. Identify the key government decision involved.
Discuss the impact of the
TUTORIAL 1
Solutions
John Wiley & Sons Australia, Ltd 2012
Page 1 of 19
CHAPTER 1
DECISION MAKING AND THE ROLE OF THE ACCOUNTANT
Exercise 1.1
Information for decisions
ASHLEY BUTLER
Ashley Butler, as the accounts supervisor, should obtain information about the account applicant to ascertain whether or not the person will be able to pay their account. In deciding to open an account, the following would be required:
Information requested
1. Customer’s business name, address and contact details
Type of information (economic / other)
Other – details ensure business exists and invoices can be posted to the correct address
2. Years customer has been in this business
Other – establishes track record and history
3. Total assets and estimates of values of assets in the business
Economic – establishes size of asset base of business 4. Total liabilities (total commitments)
Economic – establishes how much the business currently owes others to assess the extent of claims against assets
5. Profits of the business for the most recent and previous periods
Economic – used to assess whether the business generates sufficient profits to cover the payments that will have to be made of their account
6. Credit references
Other – enables Ashley to follow up with other businesses the customer already has accounts with, to assess whether the customer has paid their accounts in time and in full
7. Details of any collateral or security that can be provided should the customer default on their payments
Economic and other - Ashley will want to ensure that the business will be able to recover any unpaid amounts by claiming from a third party or having a claim over the assets of the business
Page 2 of 19
Exercise 1.7
Factors in making a government decision
Consult the relevant business journal or newspaper article and identify the facts of your case involving an important government decision. Identify the key government decision involved.
Discuss the impact of the