POA 7086 Theory

Q. What is the role of accounting.

Accounting provides accounting information for ________-______ by stakeholders.

State the role of accountants.

Answer explanation

Through providing accounting information for stakeholders' decision making, accountants act as stewards of businesses.

Identify the professional ethics principles of an accountant.

• Objectivity

• Unbiased

• Straightforward

• Integrity

Q. Define integrity.

An accountant is _______________ ___ ______ in all professional relationships.

Define objectivity.

Answer explanation

An accountant who is objective will not let bias, conflict of interest or undue influence of others override his/her professional judgement.

Q. Explain why is it important to have integrity and objectivity in preparing and presenting accounting information.

Stakeholders _____ _____ in the information provided by accountants who must adhere to professional ethics, uphold integrity and be objective.

Name all the stakeholders who are interested in the affairs of the business and make use of the accounting information for decision-making.

Hint: 9 in total

Identify examples of accounting information needed by stakeholders of a business for decision-making.

• Cost of inventory

• Trade receivables balance

• Cash discounts

• Reputation of supplier

• All of the above

Identify examples of non-accounting information needed by owners and managers of a business for decision-making.

• Reputation of customers

• New customer's repayment history

• Customer's preference of inventory

• Specific industry outlook

• All of the above

Q. Explain why lenders are interested in the business' accounting information.

To decide whether to _____ ____.