Chapter 1 - Accounting Theory Task A Solutions

1. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 1 – THE NATURE OF ACCOUNTING
Page | 1
Name
Chapter 1 – Task A
Qualitative Characteristics
Question 1
The owner of a small business has decided to make the following changes to the way in which she
records and reports the financial information of her business:
1. Change the layout of the Balance Sheet so that Current and Non‐Current Assets are listed
together in one group called “Assets”, rather than separately as they are now.
2. Prepare the reports for next year right now by basing the figures on the owner’s estimates
of what will take place.
3. Prepare a graph of the key numbers in the reports from the written information in the
reports.
4. Include the value of her apartment ($540,000) in the “Assets” section of the Balance Sheet
of the business.
5. Throw out all documents (originals and copies) after three months in order to save space in
the firm’s filing cabinets.
With reference to an appropriate Qualitative Characteristic of Accounting, explain whether each of
these changes should be made.
Change #1
Qualitative characteristic
Explanation
1 + 2 = 3 marks

2. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 1 – THE NATURE OF ACCOUNTING
Page | 2
Change #2
Qualitative characteristic
Explanation
1 + 2 = 3 marks
Change #3
Qualitative characteristic
Explanation
1 + 2 = 3 marks
Change #4
Qualitative characteristic
Explanation
1 + 2 = 3 marks

3. VCE ACCOUNTING
UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS
CHAPTER 1 – THE NATURE OF ACCOUNTING
Page | 3
Change #5
Qualitative characteristic
Explanation
1 + 2 = 3 marks
Total /15 marks