SOLUTIONS TO END-OF-CHAPTER

© Oxford University Press 2018 1

SOLUTIONS TO END-OF-CHAPTER

QUESTIONS CHAPTER 1

DEVELOP YOUR UNDERSTANDING

 Question 1.1 Your answers should have included the following points, among others. You may well have been able to think of more points than are given here. In all four cases, figures should be compared with previous years’ figures to determine whether current year figures are higher or lower than in the past.

Information required by the trustees of a charity:

• Donations received • Legacies received • Money received from fund-raising campaigns • Ability of the charity to continue to attract financial support • Expenditure on charitable purposes • Expenditure on administration • Expenditure on administration as a percentage of total expenditure/income • Number of beneficiaries assisted • Whether the charity made a surplus this year or whether a deficit arose from expenditure being higher than income • Spare funds to use in an emergency or in the case of a natural disaster.

Information required by the managers of a secondary school:

• Number of pupils on roll • Number of teachers • Pupils per teacher • GCSE and A level results • Average GCSE and A level points per pupil • Number of applications received for new entrants into year 7 next year • Whether numbers of pupils are rising or falling • Reputation of the school among parents, pupils and local residents6FRWW,QWURGXFWLRQWR$FFRXQWLQJ (Introduction to Accounting 1e Peter Scott) (Solution Manual all Chapters) 1 / 4

Solution to end-of-chapter questions Chapter 1 © Oxford University Press 2018 2 • Whether the secondary school is staying within its budget or not • Pupil and parent satisfaction scores with the educational experience delivered.

Information required by the managers of a university:

• Number of applications per course • Number of offers per course • Number of students enrolling each year • Average A level points or equivalent of students enrolling on courses • Degree classifications gained by students at the end of their course • Starting salaries of students entering employment at the end of their course • Employment rate of students at the end of their course as a percentage of those graduating • Graduating students still unemployed six months after the end of their course • Satisfaction ratings from employers with graduates of the university • Student satisfaction ratings for each course • Staff/student ratios • Drop-out rates • Completion rates • Surplus or deficit generated each year • Research papers published by staff • Research grants awarded to staff • The value of research grants awarded to staff • Research awards gained by staff.

Information required by the managers of a manufacturing business:•

Profit or loss for the year • Number of products produced and sold in the year • Selling prices for products whether these are rising or falling • Demand for products whether this is rising or falling • Investment in new machinery/facilities • Number of new/improved products developed this year • Productivity of employees, products produced per employee • Number of customer complaints about products • Health and safety record, number of employees injured while at work • Financial stability of the business • Whether the budget for the year was met or not.6FRWW,QWURGXFWLRQWR$FFRXQWLQJ 2 / 4

Solution to end-of-chapter questions Chapter 1 © Oxford University Press 2018 3  Question 1.2 Your chart should include the following details (though you may have thought of more points than

are given here):

• Costs

• Transfer fee demanded by potential targets’ current clubs • Weekly wages that new striker is likely to demand • Signing on fee for new striker • Agent’s fees for handling the transfer • Length of proposed contract in years

• On-pitch performance

• Number of career goals • Number of goals in the last 12 months (to determine current scoring record) • Goals per game • Number of yellow and red cards received over career • Number of yellow and red cards received in the last 12 months (to determine current discipli- nary record) • Number of games missed through suspension in the last 12 months • Number of minor injuries suffered in the last 12 months • Number of serious injuries suffered over career • Number of games missed through injury in the last 12 months.

• Off-pitch performance

• Number of charitable activities undertaken in the last 12 months • Number of clubs played for during career (to gauge loyalty to past clubs) • Diet • Alcohol consumption • Age (to assess the number of playing years left) • Fitness levels • Number of non-football related stories in the press about the player in the last 12 months (to gauge the likelihood that the player will get into trouble and damage the reputation of the club) • Reputation among fellow professionals (scores out of 10).6FRWW,QWURGXFWLRQWR$FFRXQWLQJ 3 / 4

© Oxford University Press 2018 1

SOLUTIONS TO END-OF-CHAPTER

QUESTIONS CHAPTER 2

DEVELOP YOUR UNDERSTANDING

 Question 2.1 Resources that are assets Apply the four criteria to show why the resources in the question are assets of entities and so are recognised on the statement of financial position.(a) Motor vehicles purchased by an entity • Does the entity control the resource? Yes, by virtue of purchasing the motor vehicles and registering them in the company’s name at the DVLA.• Is there a past event giving rise to control of that resource by the entity? Yes, the purchase of the vehicles.• Will future economic benefits flow to the entity from that resource? Yes, the motor vehicles can be used to deliver goods to customers, be used by sales reps to visit customers to generate more sales or for any other business purpose that will result in increasing profits, cash and the inflow of economic benefits.• Can the cost or value of the asset be measured reliably in monetary terms? Yes, the cost of the motor vehicles can be readily determined from the purchase documents and the cash paid from the bank.(b) Inventory received from suppliers • Does the entity control the resource? Yes, by virtue of the contract signed or verbal agreement with suppliers for the supply of goods to the entity.• Is there a past event giving rise to control of that resource by the entity? Yes, the delivery of the inventory by suppliers and the receipt of that inventory by the entity (legally, title to the goods passes on receipt by the customer).• Will future economic benefits flow to the entity from that resource? Yes, the inventory can be used in production to produce more goods for sale or, in the case of retail businesses, the inventory can be sold at a higher price to customers and so produce economic benefits in the form of cash flow and profit.• Can the cost or value of the asset be measured reliably in monetary terms? Yes, the cost of the inventory can be readily determined from the invoices from the suppliers and by the cash paid from the bank to suppliers for the goods delivered.6FRWW,QWURGXFWLRQWR$FFRXQWLQJ

• / 4