Describe limitations of the analysis of financial statements

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Questions -

Question 1 - When do you use average amounts in financial ratio calculations?

Question 2 - Your dentist has decided to use process costing for the month of August. Should you reschedule your 30 August appointment?

Question 3 - Give 2 examples of an internal control procedure that could be implemented to strengthen internal control over cash. Explain.

Question 4 - The Statement of Financial Position shows assets, liabilities and owners equity values at a certain date. It doesn't give any guidance for the future prospects of a firm. Do you agree or disagree. State your reasons.

Question 5 - Your manager states that if they change the depreciation policy on existing plant & equipment by increasing the useful life this can reduce depreciation expense and increase income by 10%. Advise your manager whether this change is possible with reference to accrual accounting conventions.

Question 6 - How does the accountant decide whether to classify an interest payment or receipt as an operating activity?

Question 7 - "Financial accounting statements reflect past events. Therefore they are not useful in assisting users making decisions as decisions can only be made about future actions". Do you agree or disagree, explain.

Question 8 - Describe some limitations of the analysis of financial statements. Provide suggested remedies for each of the limitations mentioned.

Reference no: EM132781086

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