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Answering Theory Questions

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VCE Accounting. Video of this presentation can be found on my YouTube channel here https://www.youtube.com/channel/UCf5jyuJoYwie8tWfvjEc0zg.

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Answering Theory Questions

  1. 1. Answering Theory Questions • It is recommended that you adopt the following approach when answering a theory question: • Identify: identify the relevant Qualitative Characteristic or Accounting Principle • Define: define the Qualitative Characteristic or Accounting Principle you have identified • Relate: relate the Qualitative Characteristic or Accounting Principle to the question or case study you have been given.
  2. 2. Answering Theory Questions For example, this question could be answered in the following way: “The owner of a small business has decided to omit cents from figures listed in the Balance Sheet. Explain whether the owner is correct in doing this.” Identify Relevance Define Relevance states that only information which influences decision- making should be included in the firm’s financial records. Relate In this case, the omission of cents is not material enough to effect any decision the owner makes based on the figures in the Balance Sheet.
  3. 3. Explain The owner is correct in making this decision due to the concept of. Relevance. Relevance states that only information which influences decision- making should be included in the firm’s financial records. In this case, the omission of cents is not material enough to effect any decision the owner makes based on the figures in the Balance Sheet. Answering Theory Questions For example, this question could be answered in the following way: “The owner of a small business has decided to omit cents from figures listed in the Balance Sheet. Explain whether the owner is correct in doing this.”v Explain The owner is correct in making this decision due to the concept of. Relevance. Relevance states that only information which influences decision- making should be included in the firm’s financial records. In this case, the omission of cents is not material enough to effect any decision the owner makes based on the figures in the Balance Sheet. Explain The owner is correct in making this decision due to the concept of. Relevance. Relevance states that only information which influences decision- making should be included in the firm’s financial records. In this case, the omission of cents is not material enough to effect any decision the owner makes based on the figures in the Balance Sheet. Explain The owner is correct in making this decision due to the concept of. Relevance. Relevance states that only information which influences decision- making should be included in the firm’s financial records. In this case, the omission of cents is not material enough to effect any decision the owner makes based on the figures in the Balance Sheet.

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