Section A: Short Answer Essay Questions:

Please answer the following questions:

1. Accounting is normally defined in terms of ‘recording, classifying, summarising and communicating economic information about a reporting entity’. 

Define and provide an example of the following key terms:

a) Classifying

b) Summarising

c) Communicating

d) Economic information

2. Outline your opinion on the following statement: ‘it was legal and others were making money that way’? How might we best move away from this attitude, and what should our approach be? Refer to Real World 1.1 (Atrill et. al. 2018).

3. In relation to auditing, what is meant by expectation gap? 

4. What questions should you ask if further doubts exist as to whether a transaction is an asset or an expense?

(Tips: explain any accounting concepts involved in solving this case)

5. What are the differences between a Liability and Owner’s Equity?

6. Analyse Virgin Australia Holding Ltd (VAH) 2019 Annual Report and answer the following questions:

a) On the Income Statement, what are ‘Revenue and Income’ comprised of? And how are revenue recognised for freight? (Tips: see note B3, p58)

b) What are the main components in the figure for ‘property, plant and equipment’ in the balance sheet (statement of financial position) of VAH?

c) What method is used to calculate depreciation for Property, Plant & Equipment?

d) On the Statement of Cash Flows, what is meant by the term ‘Cash and Cash Equivalent at 30 June’ AND what are these comprised of?

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