Essays on Financial Accounting Issues Assignment

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The paper 'Financial Accounting Issues' is a wonderful example of a Finance and Accounting Assignment. The financial statement of ABC ltd for the year just ended 30th June 2013 was certified for release to the public by the company directors on 21st September 2013.(AASB 101.138b). this is a company registered under the Australian corporation act. Summary of accounting policy adopted 1). Historical cost convention. The company books of account have been prepared under the historical concept and prudence observed in their recording except for treatment of land and building in which they are measure at face value while its accumulated depreciation is deducted from the cost value.

The assets disposed of by the company were measured at fair value. 2). significant accounting estimate adopted. It is the requirement of the Australian corporation act to ensure that all companies prepare their financial statement and make judgments and estimates on all recording of the company transaction in its books of account. These estimates and judgments are based on historical performance and other circumstances around the company that might have an effect on company performance. Making realistic provision ABC ltd makes an estimate on provisions for doubtful debt and expense based on the past performance of debtor’ s balances.

Provision for annual leave will reduce in the next financial year signifying that the company is making good provisions and estimates. 3. New shares The company intends to Issue new 3,000,000 shares at an issue price of $3 per share on application through a prospectus. This process is going to be exercised in the next financial period and hence does not affect the current financial statements. 4). revenue recognition. The ABC ltd realizes revenue when the amount is entitled to the income and amount quantified with reasonable accuracy.

Income is arrived at by deducting the number of goods and service tax payable to the Australian tax office 4a). Sale of asset Gain or loss on disposal of an asset is arrived at deducting the carrying amount of an asset and the proceeds value at the time of disposal 5) Expense. The expense of the company is accounted for on accrual basis, categorized in their respective classes and that expense that cannot specifically be attributed to a specific category is allocated to another expense account. 5).

Trade receivables. The company account and recognize receivables at their original invoice value less provision for doubtful debt. The carrying amount at the end of the accounting period represents the fair value of receivables. DIRECTORS REPORT ABC ltd Year ended 30th June 2013 Director’ s report The director presented the annual financial report of the company for the year ended June 2013 Company principle activities ABC Company Limited is a registered and resident in Australia. The principal activity of the company is the manufacture and sale of consumable products. Results and appropriation The income statement, statement of financial position and cash flows for the financial year ended June 2013 are set out in page in page 1 and 2.during the year, the company made an annual net profit after tax of $34,346.the directors declared and paid a final dividend of $10 cents per share to its existing shareholders.

a bonus issue of 1 for every 11 held share was given to shareholders being financed from the general reserve account. Arrangements to purchase shares The company or its subsidiary company did not enter into an agreement or be a part of an agreement that will enable the company director to acquire benefits inform purchased shares. Fixed assets Detail of movement in property, plant, and equipment of the company is displayed in the movement schedule.

During the year ended, the directors disposed of some assets and had a plan of acquiring a new delivery van for the company. Changes in equity and reserves The director transferred a sum of $4,000,000 from the reserve account to retained earning account, the final dividend of $480,000 were paid out of retained earnings of the company.

New ordinary shares of 3,000,000 at $3per share will be raised in the next financial year through prospectuses. No other changes were envisaged in the reserve account other than a transfer for payment of dividends. Company director To the year ended June 2013 and date of reporting, the company director was Michael Brien . There is no presence of provisions in the company article of association in relation to director transfer or sequestration, Michael Brien continued to be a director in the next financial year The company did not enter into an ant contract with a director other than that of being a director and providing services to the company. AUDITORS REPORT An independent audit report to members of ABC ltd We have audited the financial statement of ABC ltd for the year ended June 2013.

The financial statement of a company constitutes a statement of financial position. The income statement, Cash flow, and director’ s declaration to together with notes to the financial statement It is the responsibility of the directors to ensure that proper books of account are prepared and reflects a true and fair view of the company’ s financial position in agreement with the corporation act 2001.

the responsibility includes a good system of internal control that detects and prevents error and frauds and adequate accounting controls, policies, and estimates adopted. We conducted an independent audit in accordance with the Australian auditing standards and corporation act 2001 to obtain reasonable assurance as to whether the books of account are free from material misstatement and express an opinion to members of the company. It is the responsibility of management to ensure that an effective internal control system is adopted; our responsibility is to perform an audit on a test basis and give an independent report.

The nature of our audit is influenced by factors such as inherent limitation, performing an audit on a test basis and professional judgment hence an audit cannot guarantee full detection of material misstatement. In our audit opinion, the company has disclosed all the information and adopted the Australian accounting standards as permitted by the corporation regulation.   Accounts are in agreement with books and the financial statement shows a true and fair view of the company state of financial position and its performance for the year ended June 2013. AA firm of associate Certified public accountant

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