Chapter 1 Introduction to finance and accounting Discussion questions – Easy 1.1 What is the purpose of producing accounting information? Solution: The objective of providing accounting information is to enable users to make more informed decisions and judgements about the organisation concerned. LO1 Explain the nature and role of accounting 1.2 Why is it important to have a partnership agreement specifying the arrangement for allocating (dividing) profits between the partners? Solution: Without a formal partnership agreement, operating and administrative difficulties will inevitably arise. The resolution of such difficulties without an agreement may well be costly in time, financial performance and particularly inter-partnership relationships. LO2 List the main groups that use the accounting reports of a business entity, and summarise the different uses that can be made of accounting information 1.3 What type of accounting information is produced more frequently? Why? Solution: Management accounting information is provided on an ‘as needed’ basis for managers. Financial accounting reports, on the other hand, are prepared at less frequent, scheduled dates (e.g. year-end, quarterly or monthly). LO3 Compare and contrast financial and management accounting 1.4 List three reasons for starting a business. Explain which reason is most important and why. Solution: A business may be started for any number of reasons. To make a profit is probably the primary goal for most. Other reasons may include: to provide employment, to provide services or materials to a parent company or to provide community services. Which goal is most important will vary depending on the objectives of the business owner. LO4 Identify the main purpose of a business (while recog