ACC 281: BASIC ACCOUNTING AND FINANCIAL MANAGEMENT

SEMINAR QUESTIONS
1. State the general objective of preparing financial statements.
2. The Accounting Framework identifies fundamental qualitative characteristics of financial
statements.
Required: Explain in detail each of the fundamental qualitative characteristics.
3. Discuss four (4) limitations of accounting and financial reporting
4. Do the following classify as an asset or liability within the definitions given by the
Framework? Give reasons.
a. Maandazi Ltd has purchased machinery for Tshs100 million. It also purchased a patent
for Tshs10 million. The patent will give the company exclusive use of a particular
manufacturing process which will save Tshs9 million a year for the next four years.
b. Adams Car Sales intends to purchase four imported cars, in the coming international
car show to be held in London.
c. Poolwhirl Co provides a warranty with every refrigerator sold.
5. Explain five elements of financial statements as identified in the Framework for the
Preparation and Presentation of Financial Statements
6. Discuss the enhancing qualitative characteristics of financial statements as identified in the
accounting Framework.
7. Outline benefits that financial statements provide to users of financial statements.
8. Indicate which of the following items could appear as an asset on the statement of financial
position of a business. Explain your reasoning in each case.
a) TZS 1,000 owed to the business by a customer who is unable to pay.
b) A patent, bought from an inventor that gives the business the right to produce a new
product. Production of the new product is expected to increase profits over the
period during which the patent is held.
c) A new marketing director, whom the business had recently hired, who is confidently
expected to increase profits by over 30 per cent during the next three years.
d) A recently purchased machine that will save the business TZS 10,000 each year. It is
already being used by the business but it has been acquired on credit and is not yet
paid for.
9. The funds needed under the productive capacity model to achieve physical productive
capacity of Mars Inc. at the beginning and at the end of the year were Tshs43,000 and
Tshs50,000 respectively. The owners had introduced funds amounting to Tshs10,000
during the year. Required: What is the profit or loss made by Mars Inc.?
10. Which of the following items is not an asset?
a) Plant and equipment
b) Bank loan
c) Computer software and hardware
d) Land and buildings
11. Which of the following items represents income?
a) Interest received
b) Share capital
c) Cash received from sale of a non-current asset
d) Salaries and wages to employees