edf40wrjww2CF_PaperMaster:Desc
Section A (Answer any two questions)
1. Explain the accruals concept and the matching principle giving one example of the application of the latter in financial statements.
(10 marks)
2. You have recently overheard the following statements:
(a) "When a company's shares are traded on the Stock Exchange and the current market price is above the nominal value of the shares, this excess is recorded by the company in the share premium account."
(b) "A ?reserve', in the context of company accounts, is an amount of cash which can legally be used to a pay a dividend to shareholders."
(c) "Companies may set out their P and L account and balance sheet in any form that they wish, provided that these statements contain only the information specified in company law."
(d) "UK company law imposes an overriding requirement on company directors that they produce financial statements that show a ?correct and accurate view' ".
(e) "A public limited company is one that is owned by the government, whereas a private limited company is one that is owned by the Stock Exchange".
Required: Comment critically on each of these statements.
(10 marks)
3. Does social and environmental reporting really fall within the scope of accounting? Are accountants really the best people to prepare and audit such reports?
& ...