a) Explain:
i) What is meant in financial accounting by the stable monetary unit convention?
ii) How the convention affects the reporting of assets on the balance sheet.
b) Suggest three reasons why a business would act in a socially responsible manner.
c) Discuss two general aspects of earnings that need to be considered when evaluating the quality of earnings in an income statement produced for external users.
d) Dee Pty Ltd takes 60 days to pay for goods purchased from its supplier Tee Pty Ltd. In an effort to speed up payment Tee Pty Ltd offers Dee Pty Ltd Co a 2% discount for payment within 20 days. Calculate the annual percentage cost to D Co of not taking advantage of the discount.
e) List two differences between a proprietary (private) company and a public company where both companies are limited by shares.
f) Mega Company is considering setting up a new division with an estimated divisional profit margin of $250 000 and a divisional investment of
g) $1 000 000. The required rate of return for Mega Company is 16%. Calculate the performance measure, Residual Income, for the proposed division. On the basis of this calculation should Mega Company go ahead with its plan? Explain.