1.Explain the purpose of using standard accounting techniques to identify the
extent of debt and equity financing. (5 marks)
2. What is likely to be the main problem in achieving the goal of having one set
of standards uniformly adopted throughout the world? (5 marks)
3. a. What is meant by ‘fair value’?
b. Why might ‘fair value’ be the best method to measure the value of some
c. What assets or types of assets might be measured at ‘fair value’?
d. What other valuation criteria could be used for the purpose of measuring
the value of an asset? (2 marks each, 8 marks)
4. a. What is meant by ‘off balance sheet’ activities?
b. Why could it be important to report them? (2 marks each, 4 marks)
5. A distinction is made between financial and prudential reporting. Can you
explain the nature of this distinction and why it is important? (5 marks)
6. As a Financial Analyst with an investment advisory firm, your job is to follow
the mining industry. In particular, you compare different organisations in this
industry to recommend to clients to invest in.
a. What is the basic objective of financial reporting?
b. Briefly discuss some of the types of predictions and related evaluations
of performance that you would probably make about the businesses you
c. State why an analyst might feel more comfortable using information that
has been audited by an independent auditor. (2 marks each, 6 marks)
7. When working in accounting, identify and list the internal controls
procedures that need to be in place to ensure an organisation can meet its
strategic goals. (5 marks)
8. Review the characteristic of an effective system of internal control. Include
the following in your review:
a. Identify two things an organisation can do to make it harder for a cashier
to steal from the business and hide the theft.
b. Explain how each new measure taken by the organisation would
accomplish its goal. (5 marks each, 10 marks)
9. Why would it be important to monitor the interrelationships between the long
and short-term objectives of a business to ensure consistency of returns
between operational and investment plans. (5 marks)
10. Explain why you would regularly review tax efficiencies of the financial
strategy to ensure an organisation continues to optimise returns from
assets. (5 marks)
11. Explain the ethical consideration you will make to ensure you are compliant
and your behaviour is in line with financial legislation for example, taxable
transactions and statutory reporting requirements. (5 marks)
12. Financial planning is an important part of managing budgets. Why is this the
case and provide some examples of techniques used to ensure a plan is in
place for the following scenarios:
a. A supplier has had to increase the cost of their product due to the
increasing fuel costs. (3 marks)
b. Your initial staffing needs were under-estimated and you have had to hire
another worker in the warehouse to keep up with the work load of orders
c. You have two customers who have not paid their invoice by the due date.
You have sent reminders to both and both have indicated that they will pay
next week. This leaves a shortage in your cash flow and means some bills
you have cannot be paid. (3 marks)
Assessment 1 total: 72 marks