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ACCT20074 Assignment on Contemporary Accounting Theory

   

Added on  2020-04-07

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ACCT20074 Final AssignmentTerm 2, 2017Student ID:..................................... Student name..............................................................Marker’s overall comments:The markers may include any final comments here.Overall Mark (Total) out of 50:0

Question 1: There are several possible objectives for general purpose financial reporting. Explain what these objectives might be, and which one you think best applies to Amazon’s financial reporting (based on the information in the case study). Make sure that you fully explain your answer.According to the International Financial Reporting Standards (IFRS), the objective of general financial reporting is to offer useful information that can be used to make and evaluate decisions such as allocation of resources and investment by the report users. Financial reporting help the users to objectively track and analyze the entity’s income (Dillard, 2012). Purposely, financial reports are meant to examine the usage of resources, establish the entity’s financial health, its performance, cash flow, and resource allocation and usage (Deegan, 2014). With this information, investors and the business managers are in a better position of making decisions on how best to manage the entity. The three main objectives of general purpose financial reporting are;a)Providing information to UsersThe information contained in the financial reports is useful in several ways to the business. For example, it is used to determine whether or not to offer credit sales to customers, whether or not to invest assets and whether or not to offer dividends to the shareholders among others. Investors also rely on the report when making investment decisions (Deegan, 2014). For existing investors,like those of Amazon, are interested in knowing how annual revenue is being reinvested into the business, the amount of dividend they are likely to earn from the previous year’s proceeds, how efficient is their capital being used and whether or not the entity still remains the better place to have their cash. b)Tracking cash flowFinancial reporting provides information on the cash flows of a given entity. The information comprises of the uncertainty and timing of such cash flows. Such information is vital in establishing the liquidity/ financial health of an entity i.e. whether or not it still operates as going concern (Deegan, 2014). In evaluating the cash flows at Amazon.com, the financial report should help the investors to answer the following questions; where is the company generating its money from? What is the future of the business? Is the company making profits or losses? The questions can only be answered by tracking the cash flow (Atrill & McLaney , Management Accounting for Decision Makers, 2015). c)Analysing the entity’s assets, liabilities, and equity Investors can anticipate the business performance to expect in the future by monitoring the changes in the three financial items. The analysis will also reveal the ability of the business to meet its financial obligations. Lastly, such an analysis establishes the availability of resources to ensure future growth (Ezzamel & Heathfield, 2013). The best objective for Amazon.com

The information revealed in the Amazon’s financial report addresses the cash flows. Therefore, the investors should concentrateon tracking the company’s cash flows. First, the financial report concentrates on the company’s profitability. Profit/ loss is obtained by deducting the cost incurred in generating revenue from the revenue generated. The Amazon’s profit has been highly affected by the ever-rising cost margin (Boje, 2008). Although the Company’ sales grew by 23% to $19.3 billion, the profit realized was unsatisfactory(Deegan, 2014). Profitability also has a direct impact on the price of shares. The higher the profit, the higher the competitiveness and the higher the share price. The report shows that the company shares have dropped in the market. Investors are shying away from placing their cash in the company(Jennins, 2004). By tracking and analyzing the Amazon’s cash flows of their previous years, the investors will form a formidable decision whether or not to reward the growth strategies. The shareholders can also predict the likelihood of the company’s performance improving the future. Lastly, the management can use the cash flow analysis report to identify the weakness within the company’s operational strategy and come up with remedies to minimize the cost or maximise the profit margin (Riahi-Belkaoui, 2002). References:Atrill, D. P., & McLaney , E. (2015). Management Accounting for Decision Makers (8 edition ed.). London, UK: Pearson.Boje, D. M. (2008). Critical Theory Ethics for Business and Public Administration. New York: IAP.Deegan, C. (2011). Financial Accounting Theory: European. New York: McGraw-Hill Higher Education.Deegan, C. M. (2014). Financial Accounting Theory (4 ed.). North Ryde, NSW: McGraw Hill Education (Australia) Pty Ltd.Dillard, J. F. (2012). Accounting as a Critical Social Science. Accounting, Auditing & Accountability Journal.Ezzamel, M., & Heathfield, D. (2013). Perspectives on Financial Control: Essays in memory of Kenneth Hilton. New York: Springer.Jennins, A. (2004). Financial Accounting. New York: Thomson Learning.Riahi-Belkaoui, A. (2002). Behavioral Management Accounting. New York: Quorum Books.Tyson, L. (2001). Learning for a Diverse World: Using Critical Theory to Read and Write About Literature. London: Routledge.Marker’s Comments: The marker will provide feedback here.Mark (10):0Exceeds Expectations(High Distinction) 85-100%Exceeds Expectations (Distinction) 75 - 84%Meets Expectations (Credit) 65 – 74%Meets Expectations (Pass) 50 – 64%Below Expectations (Fail) below 50%Demonstrates a balanced and very high level of detailed knowledge of Demonstrates a balanced and high level of knowledge of core concepts by Demonstrates a good level of knowledgeof some of the core concepts by Demonstrates limited knowledge of core concepts by providing a limited level of Demonstrates little, if any, knowledge of the core concepts with extremely limited,

Exceeds Expectations(High Distinction) 85-100%Exceeds Expectations (Distinction) 75 - 84%Meets Expectations (Credit) 65 – 74%Meets Expectations (Pass) 50 – 64%Below Expectations (Fail) below 50%core concepts by providing a very highlevel of analysis. Utilises current, appropriate and credible sources.providing a high level of analysis. Utilises mostly current, appropriate and credible sources.providing some level of analysis. Utilisessome current, appropriate and credible sources.analysis. Utilises few current, appropriate and credible sources.if any, analysis. Utilises little, if any, current, appropriate and credible sources.Quality of writing at a very high standard. Paragraphs are coherently connected to each other. Correct grammar, spelling and punctuation.Quality of writing is of a high standard. Paragraphs are mostly well structured. Few grammar, spelling and punctuation mistakes.Quality of writing is of a good standard. Few grammar, spelling and punctuation mistakes.Some problems with sentence structure and presentation Frequent grammar, punctuation and spelling mistakes. Use of inappropriate language.Quality of writing is at a very poor standard so barely understandable. Many spelling mistakes. Little or no evidence of proof reading.The assessment presents a detailed andfocused summary of the ideas presented; drawing clear and well thought-out conclusions.The assessment presents a fairly detailed and focused summary of the ideas presented; drawing fairly clear and well thought-out conclusions.The assessment presents a somewhat detailed and focused summary of the ideas presented; providing some evidence of conclusions.The assessment provides limited detail with no clear summary of the ideas presented; drawing limited conclusions.The assessment fails to provide any clearevidence of the ideas presented; drawing no clear conclusions.

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