318 Accounting: Business Reporting for Decision Making
Examine the following articles on the internet that give various views of the crisis.
- People get naked to ‘expose Wall Street’ 2011, video recording, CNN, New York, 4 August,
http://edition.cnn.com. - O’Neill, B 2011, ‘Class antagonisms or mollycoddled youth?’, The Australian, 10 August,
http://www.theaustralian.com.au. - Klein, N 2011, ‘Looting with the lights on’, The Guardian, 17 August, http://www.guardian.co.uk.
Required
a. Hypothesise why cash and future cash flow is so important for an individual, business or
country, and why it is necessary to report such information.
b. Many critical commentators throughout the press have called for an end to a ‘debt-is-money’
style of thinking. Differentiate between solvency and liquidity and their relationship to debt.
c. Make a judgement about governments’ economic stimulus efforts. Should the governments
have bailed out the banks? In answering this question, assess a government’s duty to provide an
economic framework that encourages investment, employment, opportunities and social infra-
structure with its desire to keep a banking system intact and credit forthcoming.
d. In Europe, the European banks have been forgiven for not valuing some of their asset holdings
(creditors that owe them money) in Greek, Portuguese, Irish and Spanish securities, in line with
the required mark-to-market accounting rules. This means that they have not revalued these
assets downward to what they are really worth. (One may argue that they are worthless.) If they
did, their equity would be wiped out. Assess this situation by commenting on the transparency
of this approach, whether this is sound accounting practice and the effect of this position in the
long term.
e. Appraise the reactions of both the nudists and the looters to their government’s response to the
changing global economy.
References
CSR Ltd 2015, Annual report 2015, http://www.csr.com.au.
JB Hi-Fi Ltd 2015, Preliminary annual report 2015, http://www.jbhifi.com.au.
JB Hi-Fi Ltd 2015, Preliminary final report 2015, http://www.jbhifi.com.au.
Klein, N 2011, ‘Looting with the lights on’, The Guardian, 17 August, http://www.guardian.co.uk.
Montgomery, R 2011, ‘Value.able: Centro’, Eureka Report, http://eurekareport.com.au.
O’Neill, B 2011, ‘Class antagonisms or mollycoddled youth?’, The Australian, 10 August, http://www.theaustralian.com.au.
People get naked to ‘expose Wall Street’ 2011, video recording, CNN, New York, 4 August 2011, http://edition.cnn.com.
Acknowledgements
Figures 7.2 and 7.4: © JB Hi-Fi Ltd.
Apply your knowledge: Statement of cash flows for the year ended 31 March 2015: © CSR.
Photo: © Andrey_Popov / Shutterstock.com.
Photo: © Shulevskyy Volodymyr / Shutterstock.com.