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MELBOURNE POLYTECHNIC
QUESTION 1 (5 marks)
a) List 5 stakeholders of a business (both internal and external). (approx. 80 words)
b) Explain the stakeholders’ interest in the financial information. (approx. 240 words)
QUESTION 2 (25 marks)
a) Discuss the concept of accounting and its relationship with, and influence on, the general community. (Hint: refer to the following readings, Hines, 1991; Chu,
2016; Wright, 2016). (approx. 300 words)
b) What is the GRI? (approx. 80 words)
c) In your own words explain sustainability reporting, listing the 3 components.
(Hint: refer to the Global Reporting Initiative — GRI). (approx. 230 words)
d) Select a sustainability report as an example to support your explanation. Explain why you chose the particular company’s report. Please include a web reference not the full report. (approx. 100 words)
QUESTIONS 3 (20 marks)
a) Discuss the accounting cycle and the purpose of each step. (approx. 100 words)
b) Journalise the following business transactions for the month ended on 28 February 2018 for Luck-Key Ltd in general journal form. Identify each transaction by number.
I . Shareholders invest $35,000 in cash in starting a real estate office operating as a company.
2. Purchased $400 of office supplies on credit.
3. Purchased office equipment for $6,000, paying $2,500 in cash and the remainder of $3,500 on credit.
4. Real estate commissions invoiced to clients amount to $4,000.
5. Paid $700 in cash for the current month’s rent.
6. Paid $200 cash on account for office supplies purchased in transaction 2.
7. Received an account for $500 for advertising for the current month.
8. Paid $2,200 cash for office salaries.
9. Paid $1 ,200 cash dividends to shareholders.
10. Received a cheque for $3,000 from a client in payment on account for commissions invoiced in transaction 4.
c) Post the journal entries into the general ledger, assuming the business was
started on the I st February 2018.
d) Prepare a trial balance, the statement of profit or loss, the statement of changes in equity, the statement of financial position, for Luck-key Ltd.
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Answer:
QUESTION 1:
a) List 5 stakeholders of a business (both internal and external). (approx. 80 words)
Stakeholders are individuals or groups that have an interest or stake in a business. The following are five examples of stakeholders, both internal and external, that may be associated with a business:
Shareholders
Employees
Customers
Suppliers
Government agencies
b) Explain the stakeholders’ interest in the financial information. (approx. 240 words)
Stakeholders have a vested interest in a company’s financial information because it provides insights into the company’s financial health, including its profitability, liquidity, and solvency. Shareholders are interested in financial information because it helps them determine the return on their investment and assess the company’s future prospects. Employees are interested in the financial information because it can provide insights into the company’s stability and prospects for growth, which can impact job security and opportunities for advancement. Customers may be interested in the financial information because it can impact the company’s ability to provide quality products and services. Suppliers may be interested in the financial information because it can impact the company’s ability to pay its debts on time. Government agencies may be interested in the financial information because it can provide insights into the company’s compliance with tax laws and regulations. Overall, financial information is essential for stakeholders to make informed decisions and to assess the company’s financial performance and stability.
QUESTION 2:
a) Discuss the concept of accounting and its relationship with, and influence on, the general community. (Hint: refer to the following readings, Hines, 1991; Chu, 2016; Wright, 2016). (approx. 300 words)
Accounting is a process of recording, classifying, summarizing, and interpreting financial transactions to provide information that is useful for decision-making. Accounting information can be used by a wide range of stakeholders, including investors, creditors, government agencies, employees, and the general community. The accounting profession has a significant influence on the general community, as it impacts the way in which financial information is reported and interpreted.
According to Hines (1991), accounting is a socially constructed concept that is shaped by the cultural, economic, and political contexts in which it is practiced. Chu (2016) suggests that accounting can play a critical role in shaping the social and economic environment, as it can provide insights into the allocation of resources and the distribution of wealth. Wright (2016) argues that accounting can impact social and environmental issues, as it can provide insights into the costs and benefits of various activities and policies.
In practice, accounting can influence the general community in various ways. For example, accounting standards can impact the way in which companies report their financial performance and position. This, in turn, can impact the decisions of investors, creditors, and other stakeholders. Accounting can also play a role in promoting social and environmental responsibility, as sustainability reporting can provide insights into a company’s environmental impact and social responsibility.
b) What is the GRI? (approx. 80 words)
The Global Reporting Initiative (GRI) is a non-profit organization that has developed a framework for sustainability reporting. The GRI framework provides guidance on how companies can report on their environmental, social, and governance (ESG) performance. The GRI framework is widely used by companies around the world to report on their sustainability performance.
c) In your own words explain sustainability reporting, listing the 3 components. (Hint: refer to the Global Reporting Initiative — GRI). (approx. 230 words)
Sustainability reporting is the practice of reporting on a company’s environmental, social, and governance (ESG) performance. The Global Reporting Initiative (GRI) has developed a framework for
