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act430 homework

Name = Ahnaf Munim
ACT 430 (Homework problem 1.1 and 1.2)
Summer 2022
Submitted to AHU sir
Problem 1.1
In the year 2030, technology and artificial intelligence will become more advanced which will
allow for a large number of manual tasks such as inputting journal entries to be automated.
Machines will take on more manual and routine activities leaving accountants with more time to
analyze the financial statements and advising the business based on the information in financial
statements. In the year 2030, there will be more online shops than now since it is cheaper than
building or renting a physical shop, also more and more customers nowadays prefer to buy from
online shops as it is more convenient for them. Businesses can also access a large customer base
through online shops, as online shops can be accessed by anyone with an internet connection
from anywhere on the planet and as a result every business activity including accounting will be
computerized. So, it is important for accountants to be familiar with accounting information
systems used by their organizations. In 2030, I think that just knowing accounting will not be
enough and accountants will have to train on how use and operate accounting software. In the
future machines will take on entry level accounting jobs such as those done by clerks.
I think that in the future the role of accountants will be to provide consultancy services,
interpreting the data generated by information systems and auditing the accounting information
system to make sure they are reliable and free from any sort of manipulation and corruption.
Large companies will have more sophisticated accounting information systems which will
automate regular accounting tasks and hence companies can save money by hiring less
accountants for menial tasks. Although some of the accounting tasks will be automated,
accountants will still be relevant as they will be required to audit a company’s financial
statements and provide audit opinions and help businesses make more sound decisions.
In the future as technology becomes more accessible, more and more companies will use
accounting information systems and as dependency on information systems will increase,
accountants will have to learn how to use and operate those systems in order to stay relevant.
Problem 1.2
Answer to question A
Answer: The basic factors of communication are that must be considered are
1. Clarity of information = the financial statement preparer must emphasize on clarity of
information in financial statements so that users of financial statements can easily
understand the contents of the statement.
2. Logical sequence of information: the financial statement preparer must also arrange the
information in an organized way so that the readers do not waste time looking for
3. Diversity of users. There will be many users of financial statements like investors,
shareholders so it is the duty of financial statement preparer to identify what information
is needed by those users and present the information required to users.
Answer to question B
Answer: One communication problem is that one of users may not have financial literacy to
interpret annual reports also different users will require different information which make it
difficult for financial statement preparers to prepare annual reports to according individual needs
of each user base and also it may make the report unnecessarily lengthy.
Answer to question C
Swot analysis = swot analysis can help potential investor to make decision whether to
invest in company or not
Organizational objectives = organization objectives will outline a company’s long term
and short-term goals which will help investors to know company’s goal and strategies on
how to achieve them.
Answer to question D
Some of the advantages and disadvantages are
Annual reports convey company’s strategy and plan to achieve its goals.
It provides a way to communicate company’s strength to potential investors
Since annual reports are accessible to public, competitor may access the annual report
and get to know about company’s weaknesses which may put company at risk.
There will be pressure on management to attain strategies and goals mentioned in the
Answer to question E
Shareholders = information presented in annual reports will help shareholders to calculate risks
and returns on investments and earning per share. However, if volume of information presented
is very large then it may create information overload
Creditors = Annual reports will help creditors to find out liquidity position of a company and its
ability to pay back loan
Employees = employees can find out valuable information such as gratuity and pension plans
from annual reports and compare it with other companies to find which company provides better
pension plans.
Customer = Annual reports will provide customers with information which will help them to do
trend analysis and assess the company’s performance.
Financial analysts = Information provided in annual reports will help financial analysts to
conduct financial analysis of the company like profitability and finding out liquidity position of
the company.
Answer to question F
Management should not provide information which its competitors may take advantage of such
as its technology and confidential information like bank account details.