ACC5502-Accounting And Financial Management

Question 1

Underpayment of workers has been a topic of interest in the media in recent years. In the past few months there have been many reports in the Financial Review, The Guardian, Sydney Morning Herald and other media outlets about the fact that two major supermarket chains, Coles and

Woolworths, have underpaid staff. You are to source five articles and use the information to answer the questions below:

(a) In the case of each organisation what were the circumstances that led to underpayment of staff and by how much were staff underpaid?

(b) In relation to the principles of business sustainability performance select four of these principles which appear not to have been followed and justify your answer with examples from your readings? 8 marks

(c) In terms of business sustainability theories, in particular stakeholder theory:

(i) List six key stakeholders of the supermarkets and discuss why they might be interested in the recent publicity surrounding the supermarkets’ failure to pay staff correctly.

(ii) Do you think the supermarkets might be prioritising some stakeholders over others?

(d) Discuss two ethical philosophies or theories that are relevant to business decision making and discuss whether they have been applied in this scenario.

(e) Review the article Level Paying Field (Company Director, Oct 2019, 35, 9, pp. 45-46) at;dn=847246907461279;res=IELAPA

List five points that either board directors and/or managers should take on board from this article in relation to ensuring correct payment for staff. 5 marks

(f) As a manager, and as a result of the readings you have consulted to answer this question, what 3 points would you emphasise in relation to the impact of not paying staff correctly.

Question 2

1. What is the difference between corporate governance and corporate social responsibility.

2. Refer to the corporate governance statement of Virgin Australia and outline five of the principles that the organisation complies with to ensure good governance. 5 Marks isp/2019-corp-gov-statement.pdf

3. Refer to the 2019 financial reports for Virgin Airlines at

9-annual-report.pdf (Note there are other sites that will also provide you with this report if you type in Virgin Airlines 2019 financial reports)

Answer the following questions using the consolidated or group financial reports of Virgin and the notes to these reports for the year ended 30th June, 2019.

a) As per chapter 5 of the textbook the financial report obligations of an entity involve the preparation of four financial statements. What are they and describe what each is designed to report.

b) State the accounting equation in $ terms for Virgin at the end of the financial year.

c) What are the two largest sources of revenue for Virgin in $ terms?

d) How is this revenue measured? And when is it recognised?

e) What has shown the biggest increase in 2019 – the domestic or international market and how have you come to this decision.

f) Has cash flow at the end of 2019 improved or declined from 2019 and why?

g) What is the biggest single expense item in $ terms for Virgin in 2019?

h) What is the largest non-current asset the company owns and state its opening and closing net book value?

i) What method of depreciation is used to write off property, plant and equipment?

j) Does Virgin list any intangible assets? If so give one example.

k) In terms of triple bottom line what information did Virgin disclose about the environmentaland social dimensions of their performance? What does this tell you about the entity?

l) Which accounting firm audited the financial statement and what opinion was issued?

m) How are the operations of Virgin financed?

n) Would you invest in Virgin and why?

Question 3

Happyland Toys commenced as a family business five years ago. In order to retire the owners have decided to sell their business. They present the following Balance Sheet for prospective purchasers at 31st March, 2020. You are interested in purchasing the business and take the Balance Sheet to an accountant for advice.

Notes to the accounts:

1. The motor vans are at cost. Depreciation of $19000 has not been written off.

2. The inventory is measured at cost price. Net realisable value is $38000.

3. The business also has a bank overdraft of $4000 which has been included in the Loan

4. The profit of $28600 is the reported profit for the current reporting period.

5. The capital figure represents original capital contributed of 65000 plus profit for previous years.

6. The goodwill figure was used to ‘balance’ the Balance Sheet.

7. Interest Payable on the Loan of $3200 has not been recorded.

8. GST Paid on Purchases of $3000 has not been recorded.


a. Discuss the effect of each of the notes in terms of acceptable accounting practice and indicate what the actual figure in the Balance Sheet should be.

b. Prepare a new classified Balance Sheet which reflects more accurately the financial situation of the business. (Use the accounting equation OE = A-L to find the correct equity figure).

c. Discuss three limitations of the Balance Sheet as a financial report.



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