Chpt 1

Question 1

Role of accounting

Answer 1

To provide accounting information for stakeholders to make informed decisions on the management of resources and performance of business.

Question 2

Role of accountants

Answer 2

Accountants act as stewards of business who are responsible for managing the resources of the business on behalf of the owner. They set up accounting information systems (AIS) to prepare and provide accounting information to the stakeholders of the business for decision making.

Question 3

INTEGRITY

Answer 3

Integrity is being straightforward and honest in all professional and business relationships

Question 4

OBJECTIVITY

Answer 4

Objectivity is not letting bias, conflict of interest or undue influence of others to override professional judgement.

Question 5

WHY NEED PROFESSIONAL ETHICS?

Answer 5

As stakeholders rely on financial reports to make business decisions, the information needs to be truthful and accurate. Accountants without professional ethics may provide inaccurate or false information about the business to the stakeholders which may mislead them into making poor decisions.

Question 6

OWNERS / SHAREHOLDERS

Answer 6

To decide whether to continue to invest in the business depending on the risks and the returns related to the business

Question 7

MANAGERS

Answer 7

To decide on ways to improve the performance of the business

Question 8

SUPPLIER

Answer 8

To decide wether to sell to the business on credit, depending on its ability to pay

Question 9

SUPPLIER

Answer 9

To decide wether to sell to the business on credit, depending on its ability to pay