Managerial Accounting

Financial and Managerial Accounting

Exercise 1: Introduction - individual

This item of assessment is Compulsory.

This assessment will help you achieve Learning Outcomes 1, 4 and 5.

Bring copy of assessment to class.

From the Text, Chapter 2, Standards for private sector accounting,

Exercises and discussion questions, p. 57:

Answer questions 3 and 7

Try to use real life examples to illustrate your answers. We will discuss your answers in class.

LENGTH: 300-400 words per question 

Due Date:  15/02/2013 at 11:59 pm

Question Three:

Using the financial statements of Air New Zealand provided in this chapter to illustrate your answer, describe how the following three statements provide users with different information about an organisation’s operations:

* Income statement

* Statement of financial position

* Statement of cash flows

Answer:

Financial statements are prepared for the purpose of providing information that is useful in making economic decisions allowing investors, managing boards to have an open and transparent view of the company’s financial outlook and position for the future. It allows informed decision making to take place when planning future investments, selling of shares along with growth and diversification plans for company directors. These statements can also be used to hold managers to account for the financial standing/performance of the company under their leadership this applies to both the dollar also the resources of the company it can be accountable to both boards, shareholder but also increasingly important is the accountability to society and the wider community.

This information is prepared and presented in the following ways:

Income statement – this provides a snap shot of revenue, expenses, profit and loss it has limitations in the fact that it does not show cash received or cash pay-outs. From the financial statements provided this shows a comparison of the years 2010 and 2011 for the group and...