Principles of Accounts for CSEC®

2nd edition

Answers to Chapter 1: Accounting as a profession

1.1 Introduction to accounting
Question 1
Bookkeeping is an aspect of accounting which is concerned with the recording of financial
information in a systematic way. For example, bookkeeping includes recording the day-to-day
transactions of a business in a double-entry system.
Question 2
Accounting is the selecting, classifying and summarizing of financial data in ways that help
interested parties to assess and improve business performance. For example, the bookkeeping
records are used to prepare end-of-year financial statements that provide the owner(s) of a
business with information about the profitability and liquidity of a business, which can then be
used to make decisions and future plans.
Question 3
a. Internal stakeholder: the owner (Jarel).
External stakeholders (any three of the following): the suppliers of fresh fruit; customers; the
government/tax authorities; competitors; local community.
b. Interests of a stakeholder (any one of the following):
Suppliers Will payment for supplies be made on time; will there be repeat/larger
orders in the future?
Customers Will the business continue to provide the goods the customer needs?
Government/Tax How much profit will the business make which will be the basis for assessing
authorities the amount of tax due?
Competitors Will wish to compare the performance of Jarel’s business with their own
business to perhaps copy successful ideas.
Local community Does Jarel’s business have any effect on the local environment (e.g. is
wastage, unsaleable fruit, etc., disposed of effectively); will Jarel’s business
provide any employment opportunities in the future; will the business make
a contribution to community development activities and/or projects?

Question 4
a. Manager, employees.
b. The bank is an external stakeholder because its involvement with Seema’s business comes
from outside the business.
c. The bank will be concerned that Seema’s business can provide security for the loan (i.e.
has valuable assets which could be sold to repay the loan should the business fail), that the
business is sufficiently successful and well managed to ensure that repayment of the loan
and interest will take place in accordance with the loan agreement.
1 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
Answers to Chapter 1: Accounting as a profession

1.2 Traditional and emerging careers in accounting

Question 5
Answers could include:
a. Five from: government departments; hospitals; charities; sports/social clubs; schools;
colleges; universities.
b. Three from: posting transactions; preparing accounts; balancing accounts; preparing trial
balances; preparing reconciliation statements.
c. Three from: integrity; honesty; reliability; thoroughness; meticulousness.
Question 6
Answers could include:
a. Three from: legal profession; accountancy profession; medical profession; real estate
operatives.
b. Three from: preparing financial statements; preparing budgets; preparing tax returns;
supervising the work of bookkeeping staff; working with auditors.
c. Three from: integrity; honesty; reliability; thoroughness; accuracy; determination to keep
up to date.
Question 7
Answers could include:
The financial accountant will be concerned with preparing financial statements (for example,
income statements and statements of financial position) which are analysed to show
stakeholders (for example, owners and tax authorities) how the business is performing in regard
to profitability, liquidity, etc.
The management accountant will only be concerned with providing information for internal use
about the future of the business (e.g. budgets and other forecasts) which can help improve the
business’s performance.
Question 8
a. Auditors provide an independent check on financial statements to ensure they are
true and fair.
b. A forensic accountant is concerned with detecting and helping to prevent fraud, possibly
gathering evidence to be used in criminal cases.

1.3 Accounting ethics

Questions 9 and 10
In each case, answer to include one of: integrity; objectivity; professional competence and due
care; confidentiality; professional behaviour – and an explanation.
Question 11 and 12
In each case, answer to include two examples of inappropriate application of ethical principles
plus one (as appropriate) of: dismissal; legal proceedings; fines imposed by tax authorities;
imprisonment.

2 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
Answers to Chapter 1: Accounting as a profession

Develop your exam skills

Paper 1
1. D 2. A 3. C 4. D

3 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019