Accounting, 3rd Edition

Answers to End of Chapter Questions for Lecturers

These suggested answers are for the end of chapter questions that appear in black in the book. Answers to questions in blue are in the appendix section of the book for students to access.

Chapter 1: Discussion Answers

The answers below provide some outline points for discussion.

A1	See Book Appendix for Answer.
A2	These are innumerable! However, below are some common decisions. Should the business expand its product range? Should the business move into new markets? Does the business need to borrow money? Can the business afford to buy a new factory or machine? Should the business take over another company? How can the business increase its profit? Can the business increase its dividends to shareholders?
A3	See Book Appendix for Answer.
A4	Accounting operates within society. It, therefore, changes as society changes. To take two examples: (a) In medieval times, accounting was all about keeping track of resources, such as livestock, grain or money. Shareholders and limited companies did not exist. Today, shareholders own companies while managers run them. Shareholders, therefore, need reports on how the companies are performing. Profit has become more important as it helps to determine the dividends (i.e., cash payments) that shareholders will receive. Consequently, keeping track of assets has become less important.