What is difference between normative and positive accounting

Reference no: EM132728763

Problem a) When Kezza Ltd approached Steffs Banking Corporation Ltd for an unsecured loan of $100 million, Kezza Ltd had a good credit rating. However, the economy was depressed and Steffs Banking Corporation Ltd was concerned about lending such a large sum. You have been asked by Steffs Banking Corporation Ltd to provide a short report to the finance manager, Mike Hanshe, explaining how debt agreements and restrictive covenants can be used to safeguard debt in general. Mike wants the report to explain which agency costs of debt are controlled by specific covenants. Furthermore, he is interested to know how accounting numbers can be used in the debt covenants to help control any opportunistic behaviour on the part of Kezza Ltd.

Problem b) What is the difference between normative and positive accounting theory? Give examples of each.

Reference no: EM132728763

Questions Cloud

Create journal entries to record the changes in fair value : Create the journal entries to record the changes in the fair value of the biological assets between the ends of the two reporting periods

Which factor has the most impact on family members : Which factor do you feel has the most impact on family members? What are some of the reasons it is important to include the support persons in the plan of care?

Managing fast fashion supply chain : Compare and contrast the in-house and/or outsource decisions in managing fast fashion supply chain based on performance objectives.

Construct a time series plot : a. Construct a time series plot. What type of pattern exists in the data?

What is difference between normative and positive accounting : What is the difference between normative and positive accounting theory? How accounting numbers can be used in the debt covenants to help control

Develop a three-week moving average : Develop a three-week moving average for this time series. Compute MSE and a forecast for week 8.

Describe the use of social media and mobile applications : Reflect on current and potential future trends, such as use of social media and mobile applications/telehealth, Internet of Things (IoT)-enabled asset tracking.

Compute mse and a forecast for week 8 : c. Use a = 0.2 to compute the exponential smoothing values for the time series. Compute MSE and a forecast for week 8

How journalize the entry to record the issuance of the bonds : Pays semiannual interest of $54,000 ($1,800,000 X 6% X V), receiving cash of $1,725,151. Journalize the entry to record the issuance of the bonds.

User Account

All Pages