Task
Question 1
Financial and management accounting
Erin Lindsay is the finance manager for Alex's Antiques, which operates a small chain of retail stores and is desperate to employ additional accounting staff to assist with her workload. She insists that 'the roles performed by financial accountants and management accountants are so different that they cannot be combined into one role no matter how small or large a business is'. You are Alex Antiques' human resource manager, responsible for finding and appointing the additional staff Erin requires.
Required
In a brief report (400-500 words) and with reference (in APA 6th style) to at least two (2) but no more than four (4) sources of information outside the textbook:
• provide an overview of both roles
• outline the information each role provides and the users who rely on that information
• identify any similarities and differences that exist between the (2) roles
• conclude, with reference to your findings, whether Erin's statement is reasonable.
Question 2
Ethics
Bob Brown is an accountant for ABC Accounting and Advisors. Bob is close friends with Matt West who has recently opened a café in town. The café has been moderately successful in its first year of operations and Matt needs a bank loan to help fund an expansion that will allow the business to open for dinner. Matt has asked Bob to prepare the financial statements to make the business ‘look good to the bank'. Matt has indicated that if he gets the bank loan he will commit to being a long term client of ABC Accounting and Advisors.
Required
Using the Langenderfer and Rockness model or the St James Ethics Centre method, discuss Bob's ethical dilemma (400 words).
Question 3
Business Structures
You work for Port Alex Partners, an accounting firm specialising in establishing businesses. Five clients have recently asked you for advice about the most appropriate business structure for their situation.
A. The Jones family, comprising 5 brothers and their adult children, are in the process of using a large inheritance to invest in property and shares for the benefit of all members of the family.
B. Malcom is a builder who has just completed his apprenticeship. He is looking forward to being his own boss and making all the decisions but he has very little start up cash. As a result he is looking to start off small and grow his business to include employees in 3-5 years' time.
C. Mark and Sonya have been working together as employees in a small accounting firm. Mark is an accountant and has built up a large client portfolio, Sonya is a financial planner with the funds available to setup a new business. Mark and Sonya are looking to combine their assets and skills into one new business and go out on their own.
D. William has been operating as a sole trader transport business for a number of years and his profit has steadily increased to over $400,000. William would also like to expand his operations as he has had a few clients refuse to deal with him because of his current sole trader status.
E. Maria is a stay at home mum and has been making clay earrings and selling them to her friends for fun. Maria has been approached a number of local boutique stores who would like to stock her jewellery. Maria would like to get more serious about her business but still keep her operation small so that she can be available for her children before and after school.
Required
For each client select and justify the most appropriate business structure from the following list:
• sole trader
• partnership
• company (include the type of company in your response)
• trust
Rationale
This assessment task covers topics 1 to 2 and has been designed to ensure that you are engaging with the subject content on a regular basis. More specifically it seeks to assess your ability to:
• demonstrate and understand the role of accountants and accounting and how it can assist in making decisions;
• employ research and report writing skills.