Question

Question 1: (10 marks – approx 20 minutes)
From a critical perspective, can financial statements ever beconsidered objective or neutral? Explain your answer.
Question 2: (10 marks – approx 20 minutes)
Assume that XYZ Company Ltd decides to undertake an upwardrevaluation of its non-current assets just prior to year end of thefinancial year, the effects being that the total assets of thecompany increases, as does the total shareholders’ equity.
(a) Explain the decision of management to undertake an assetrevaluation in terms of the debt hypothesis of Positive AccountingTheory (5 marks).
(b) Explain the decision of management to undertake an assetrevaluation in terms of the management compensation hypothesis ofPositive Accounting Theory (5 marks).
Question 3: (10 marks – approx 20 minutes)
Identify and explain the perceived benefits that flow from thedecision that a country will adopt the International FinancialReporting Standards (IFRS).
Question 4: (10 marks – approx 20 minutes)
Compare and contrast the development and evaluation of positiveaccounting theories with normative accounting theories.