Question 3 You have a friend, Zoleka, who just incorporated her first company. As you are Financial Accounting 132 student and have studied the topic of companies she asked you the following questions: 1. Explain the term triple bottom line reporting? 2. What is good corporate governance? 3 In the past few years South Africa has seen a decline in ethical business standards the

Question 3 You have a friend, Zoleka, who just incorporated her first company. As you are Financial Accounting 132 student and have studied the topic of companies she asked you the following questions: 1. Explain the term triple bottom line reporting? 2. What is good corporate governance? 3 In the past few years South Africa has seen a decline in ethical business standards the

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 3TP: Consider the dilemma you might someday face if you are the chief financial officer of a company that...

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Consider the dilemma you might someday face if you are the CFO of a company that is struggling to satisfy investors, creditors, stockholders, and internal company managers. All of these financial statement users are clamoring for higher profits and more net assets (also known as equity). If at some point, you suddenly found yourself not meeting the internal and external earnings and equity targets that these parties expect, you would probably search for some way to make the financial statements look better. What if your boss, the CEO, suggested that maybe you should make just one simple journal entry to record all the goods that your company is holding on consignment, as if that significant amount of goods were owned by your company? She might say that this action on your part would fix a lot of problems at once, since adding the consigned goods to merchandise inventory would simultaneously increase net assets on the balance sheet and increase net income on the income statement (since it would decrease cost of goods sold). How would you respond to this request? Write a memo, detailing your willingness or not to embrace this suggestion, giving reasons behind your decision. Remember to exercise diplomacy, even if you must dissent from the opinion of a supervisor. Note that the challenge of the assignment is to keep your integrity intact while also keeping your job, if possible.
What has been the main thrust of recent changes in the financial reporting rules following the financial scandals of Enron, Worldcom, etc.? Multiple Choice To improve internal control over companies' financial reporting. To add to the work of the companies' external accountants. To force the companies to disclose more of their internal information. To provide incentives to increase their net income. < Prev 27 of 50 Next
3. If you are an IT auditor, then the management told you that one of their former employee was hired in a competitor company. Allegedly, the former employee is bringing notable growth to that competitor company. The manager is worried as their company slowly declining in terms of profitability. He ask your advice on the matter. What advise should you give?
Question 4: You have been appointed as a Senior Financial Analyst for a multi-national manufacturing concern. Your appointment was being discussed for so long among board members as majority of them believed that this position is not really required as they already have a team of 4 qualified financial analysts. Only CFO was convinced to have you onboard and primarily he is impressed by your previous experiences of writing financial performance reports. He also wants you to lead current team of financial analysts. In your first meeting with CFO, you have been provided with most recent Financial Statements you have been given an assignment to prepare a report on profitability, liquidity, and capital structure of the company. CFO also needs your advice if company should go for debt financing for $2.5M. Below is the extract From Financial Statements that is made by one of your team mates.…
Tutorial Questions Explain to John, your mentor, the primary goal of the organization? Your manager is requesting you to provide an explanation to the question. Would the role of a financial manager be likely to increase or decrease in importance if the rate of inflation increased? What is the difference between stock price maximization and profit maximization? What are the three principal forms of business organization? What are the advantages and disadvantages of each? What mechanisms exist to influence managers to act in shareholders’ best interests? What is an agency relationship? What agency relationships exist within a corporation? What are financial intermediaries, and what economic functions do they perform? How does an efficient capital market help to reduce the prices of goods and services? What is the term structure of interest rates? What is a yield curve? How should users and savers of…
Question 3 a) Suppose you own stock in a company. The current price per share is $25. Another company has just announced that it wants to buy your company and will pay $35 per share to acquire all the outstanding stock. Your company's management immediately begins fighting off this hostile bid. Is management acting in the shareholders' best interests? Why or why not? b) Briefly discuss principal - agent problems as related to a corporation. c) What items of good corporate governance serve to mitigate the tension between owners and managers?
11 You are a financial analyst working on the IPO for a company. Which are the possible scenarios where conflicts of interest can occur? Select ALL correct answers. You have a personal relationship with the CEO of the company You have an indirect financial interest in the company You previously worked in the company as a co-op student You are presented with corporate opportunities by the company
29. Qualified accountants have superior knowledge of tax and financial reporting. What sort of power do they exert over other managers in an organisation? Coercive power Expert power Referent power Reward power In terms of Hofstede's cultural dimensions, the country of Frangium has a high power-distance (PD) score 2. Which of the following is an aspect of corporate governance that is likely to be seen in Frangium? OA Reduced promotion of risk management and internal controls Increased emphasis on basing rewards on annual performance Reduced emphasis on separating the board roles of chair and CEO Increased number of non-executive directors on the board
ASSIGNMENT REVIEW QUEST IONS Direction: Answer comprehensively the following questions. 1. Why should corporate governance be in place? 2. In a large corporation, what are the two distinct groups that report to the chief financial officer? Which group is the focus of corporate finance? 3. Would our goal of maximizing the value of the equity shares be different if we were thinking about financial management in a foreign country? Why or why not?
Corporate Social Responsibility In his book Capitalism and Freedom, economist Milton Friedman wrote on page 133: “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it . . . engages in open and free competition, without deception or fraud.” Required: Explain why you agree or disagree with this quote.
Problem 1 For each situation, indicate whether it is indicative of poor corporate governance. Explain the reasoning for your assessment. a. The company is in the financial services sector and has a large number of consumer loans, including mortgages, outstanding. b. The CEO's and CFO's compensation is based on three components: (a) assets and profits, and (c) base salary, (b) bonus based on growth significant stock options. c. The audit committee meets semiannually. It is chaired by a retired CFO who knows the company well because she had served as the CFO of a division of the firm. The other two members are local community members - one is the president of the Chamber of Commerce and the other is a retired executive from a successful local manufacturing firm. d. The company has an internal auditor who reports directly to the CFO and makes an annual report to the audit committee. e. The CEO is a dominating personality - not unusual in this environment. He has been on the job for six…
1. Describe the mandate, functions and role of Securities and Exchange Commission in the Philippines and to the businesses. 2. As future professional accountants, what is your role in promoting and achieving sustainability and to sustainability reporting? 3. Describe the importance of corporate governance and board of directors' function. 4. Select a publicly listed company in the Philippines and check its official website. Send a screenshot and describe the corporate governance portion of the webpage. 5. What will you do if you face an ethical dilemma, and must compromise your values? 6. Differentiate a financial statement audit from operational audit. 7. If you will become an internal auditor in the future, what general competency and behavioral skill do you think you have to improve with the most? Why?