Quizzes of financial market, Quizzes of Finance

Download Quizzes of financial market and more Quizzes Finance in PDF only on Docsity! Accounting in Organisations and Society Tutorial Questions and Solutions Topic 2: Organisational forms and why, what, how and to whom should they provide accounts? 1. a) b) What is a resource? Give some examples. Your friend Max says: “Resources have to be related to generating profits.” Do you agree with him? If you don’t agree, give some examples. Suggested solution: a) 2. a) b) c) A resource can be broadly defined as something that has value in the sense that it allows an entity to accomplish an activity so as to achieve a desired outcome. For example: 1. Cash & inventory Machinery & plant Natural resources - air, water, minerals Human resources - labour, intellectual capital a FF wo NH Infrastructure - roads, waterways. It doesn't have to be related to generating profits. Resources are used by an entity to accomplish an activity to achieve a desired outcome. 1. Charity donations whilst a resources are not for profit. 2. Open source software — promoting scientific research by academics 3. Firefighting aircrafts — help fight fires but not to generate profit What are externalities? Give some examples. Do you think they should and can be measured and reported? If it is recorded, measured and reported, are they accounting information? Is it required by any of the reporting guidelines? Suggested solution: a) Externalities can be defined as Impacts that an entity has on parties external to the organisation where such parties did not agree to or take part in the activities causing the externality. 1. Externalities can be positive externalities (benefits) or negative (costs). i. Negative — coastal submergence due to climate change ii. Positive — captive breeding to prevent extinction by zoos RMIT University Page 1 of 5 ‘Accounting in Organisations and Society Module 1, Topic 2: Organisational forms and why, what, how and to whom should they provide accounts? Questions and Solutions Accounting in Organisations and Society b) Not all the externalities can be measured in monetary units, in particular the cost of environmental and social resources are comparatively difficult to measure with certainty. 1. Garment industry produces a lot of waste water- it is difficult to measure the impact to the environment or the opportunity cost of providing the water for human or animal consumption. 2. Externalities that cannot be measured in monetary unit should still be reported as non-financial information as it promotes awareness amongst various stakeholder groups. c) Yes, they are accounting information. There is no mandatory requirement that requires organisation to disclose environmental and social information but it is considered to be good practice. GRI provides reporting guidelines for reporting economic, environmental and social information. 3. You are a friend of Lucy Lu who is thinking about starting a business to sell her handmade quilts. Advise Lucy on the four factors that should be considered before deciding on what form of business structure to operate under. Suggested solution: a) Whether the owner will be the only contributor of capital to the entity; b) The degree of risk that the owner(s) are willing to take with the entity whether the entity should have limited or unlimited liability; c) The potential for growth of the entity in the future; d) Issues of taxation i.e. sole trader/partnership forms do not pay tax on the entity's profits. The owner's will include their share of the entity profit in their individual taxation returns. 4. Case Study: DC Surf Co. Download Video: https://smoovivideov1.s3.amazonaws.com/11fce144-8af0-e234 7452.mp4 Background De and Claire studied a business course together 5 years ago. De majored in Marketing and Claire majored in International Business. They met through the University Surfing Club. De works full-time as a marketing Assistant for a major retailer. On the weekends he shapes surfboards in his shed. It started out as a hobby but he has now started selling his boards in a few local surf shops. Claire works part-time for a graphic design firm. She also designs her own t-shirts and sells them online. She currently RMIT University Page2of5 ‘Accounting in Organisations and Society Module 1, Topic 2: Organisational forms and why, what, how and to whom should they provide accounts? Questions and Solutions