Accounting

TABLE OF CONTENTS

QUESTION ONE 1

THE ROLE OF BUSINESS IN SOCIETY 1

QUESTION TWO 2

USERS OF ACCOUNTING INFORMATION 2

QUESTION THREE 3

THE INFLUENCE OF NZICA 3

QUESTION FOUR 4

QUALITATIVE CHARACTERISTICS 4

QUESTION FIVE 5

IT AND THE ACCOUNTING SYSTEM 5

QUESTION SIX 6

BUSINESS STRUCTURES 6

Questions 6

Best business structures 6

QUESTION SEVEN 7

ACCOUNTING EQUATION 7

Question One

The role of Business in Society

Dilemmas that Hubbard's could face concerning stakeholders by meeting the creditors directly effects both the return on assets and net profit margin, while operating profit margin is effected by attending to labour and community.

Creditors being one of Hubbard's stakeholder, they may through customer request an organic breakfast cereal, this causing an issue on finding a guarantee constant supply of organic grains to Hubbard's. So Hubbard's can ensure customers (stakeholders) have an all year round supply in the supermarket aisles. If Hubbard's couldn't source a guarantee supply of organic grains, their performance outcomes would be reduced, thus causing the effects on the return on assets and the net profit margin.

Labour (employees') and the community being stakeholders of Hubbard's a have its dilemmas in balancing the interests of the employee by being family friendly. This can cause problems when employees have time off work due to family concerns causes labour hours down in turn cause productively down. Having less profit to purchase stock from suppliers (stakeholders), less dontations to the community school or local netball club.

Question Two

Users of Accounting Information

1. An employee of Ezi - buy is interested in the business's ability to earn enough to pay fair wage for their labour. The business's financial performance because of the desire for steady employment. Pay slips for pay and annual leave information.

2. Banks are concerned about the financial stability of Ezi - buy. Interested in the liquidity, ability to pay its debts at short notice. Security that exists to cover the advance made to Ezi - Buy.

3. In running Ezi - Buy IRD require information on profits and the expenses that the business may claim against Ezi- Buy's income. Accounting information for goods and services (GST). Employer - related taxes. PAYE from employee's earnings.

4. Suppliers to Ezi - Buy are concerned about the financial stability of the business. Interested in the ability to pay for stock supplied. Any security that may be required if unable to meet the debt.

Question Three

The Influence of NZICA

New Zealand Institute of chartered Accountants influences the financial information that large companies, such as Sanford and The Warehouse provide in their annual reports, with a set of fundamental principles to help those people preparing financial reports. It also helps auditors in forming opinions o financial reports, and users in their interpreting the reports.

NZICA helps to ensure that legislative priorities are continually assessed to benefit the economy as a whole.

Question Four

Qualitative Characteristics

1. Understand ability characteristic refers to the presentation of accounting information in such a way that it can be recognised for what it is and understood by users who are not necessarily well versed in accounting.

2. Comparability refers to the need for users to compare accounting information. This may be comparing results of the current reporting period against prior periods, or comparing the performance of an entity against the performance of similar entities in the same industry.

3. Timeliness is if there is undue delay between the occurrences of a transaction or event and the reporting of the information may lose its revevanc.Timeliness may require that information be reported before all aspects of the event or transaction are known.

Question Five

IT and the Accounting system

A. IT improves businesses accuracy by carrying out regular bank reconciliations checking that their receipts and payments recorded in their accounting records match those shown on the business bank statements. This can be done by the business logging onto their bank website. MYOB and other accounting software programs allow the business to download their statements direct in the program.

B. Timeliness