Question 1 Match the independent entities in the table on the following page wit
ID: 409624 • Letter: Q
Question
Question 1
Match the independent entities in the table on the following page with the most likely objective from the list below:
Stewardship
Income tax deferral
Cash flow prediction
Contract compliance
Performance evaluation
If more than one answer applies, provide a brief explanation justifying your response. Explanations are not required otherwise.
Entity
Objective
Brief Explanation
A private company with a large labour union that is preparing the negotiations with its union. The primary issue is large labour rate issues.
A private corporation that repairs commercial vehicles. The company has one shareholder who is also president of the company. The company urgently needs cash.
A not-for-profit golf club. Membership fees, green fees, dining room charges, and pro shop sales are used to operate the club. Club members are elected to sit on the board of directors of the club.
A family owned corporation that is planning on selling the shares to the public and become a public company that is traded on a stock exchange.
A medium sized corporation with significant bank financing, with minimum required liquidity ratios.
A municipal government.
A private corporation that provides consulting services to restaurants. The company has one shareholder who is also president of the company. The company has a small bank loan and no other major creditors.
A medium sized manufacturing company which pays senior management bonuses based on a percentage of annual profits.
Question 2
Notigi Mines Ltd. (Notigi) is a mining venture that recently began operations in northern Manitoba. The mine has been under development for the last two years and will produce its first shipments of refined metal before the end of the current fiscal year. Two senior executives who have extensive mining experience manage the mine. The mine is owned by a syndicate of 20 investors, mainly professionals such as accountants, doctors, lawyers, and dentists who live in various parts of western Canada.
Notigi extracts ore from the ground and ships it to another company for processing into refined metal. The processing company then returns the refined metal to Notifgi for sale and shipment to buyers. Notigi has already entered into long-term contracts with several buyers to purchase virtually all the mine’s production at prices specified in the contract. Any production not covered by the long-term contracts can easily be sold at prevailing prices in the open market.
Required:
Name two different users and their objective for the financial statements
For each objective chosen, include an explanation of why you chose that objective
User
Objective
Explanation
Entity
Objective
Brief Explanation
A private company with a large labour union that is preparing the negotiations with its union. The primary issue is large labour rate issues.
A private corporation that repairs commercial vehicles. The company has one shareholder who is also president of the company. The company urgently needs cash.
A not-for-profit golf club. Membership fees, green fees, dining room charges, and pro shop sales are used to operate the club. Club members are elected to sit on the board of directors of the club.
A family owned corporation that is planning on selling the shares to the public and become a public company that is traded on a stock exchange.
A medium sized corporation with significant bank financing, with minimum required liquidity ratios.
A municipal government.
A private corporation that provides consulting services to restaurants. The company has one shareholder who is also president of the company. The company has a small bank loan and no other major creditors.
A medium sized manufacturing company which pays senior management bonuses based on a percentage of annual profits.
Explanation / Answer
Answer 1
Entity
Objective
Brief Explanation
A private company with a large labor union that is preparing the negotiations with its union. The primary issue is large labor rate issues.
Contract compliance
A private corporation that repairs commercial vehicles. The company has one shareholder who is also president of the company. The company urgently needs cash.
Cash flow prediction
A not-for-profit golf club. Membership fees, green fees, dining room charges, and pro shop sales are used to operate the club. Club members are elected to sit on the board of directors of the club.
Stewardship
A family owned corporation that is planning on selling the shares to the public and become a public company that is traded on a stock exchange.
Cash flow prediction
A medium sized corporation with significant bank financing, with minimum required liquidity ratios.
Cash flow prediction
A municipal government.
Stewardship
A private corporation that provides consulting services to restaurants. The company has one shareholder who is also president of the company. The company has a small bank loan and no other major creditors.
Cash flow prediction
A medium sized manufacturing company which pays senior management bonuses based on a percentage of annual profits.
Performance evaluation
The above entities are most likely matches with objectives. Thes do not have direct linkages, but each objectives are linked indirectly. Please review the meaning of each objective and entity, as it will help in understanding their linkage with each other.
Entity
Objective
Brief Explanation
A private company with a large labor union that is preparing the negotiations with its union. The primary issue is large labor rate issues.
Contract compliance
A private corporation that repairs commercial vehicles. The company has one shareholder who is also president of the company. The company urgently needs cash.
Cash flow prediction
A not-for-profit golf club. Membership fees, green fees, dining room charges, and pro shop sales are used to operate the club. Club members are elected to sit on the board of directors of the club.
Stewardship
A family owned corporation that is planning on selling the shares to the public and become a public company that is traded on a stock exchange.
Cash flow prediction
A medium sized corporation with significant bank financing, with minimum required liquidity ratios.
Cash flow prediction
A municipal government.
Stewardship
A private corporation that provides consulting services to restaurants. The company has one shareholder who is also president of the company. The company has a small bank loan and no other major creditors.
Cash flow prediction
A medium sized manufacturing company which pays senior management bonuses based on a percentage of annual profits.
Performance evaluation
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