Accounting and Society Answer 2022

Running head: ACCOUNTING AND SOCIETY
Accounting and Society
Name of the Student
Name of the University
Author’s Note

ACCOUNTING AND SOCIETY1
Table of Contents
Requirement (a)..........................................................................................................................2
Requirement (b).........................................................................................................................2
Requirement (c)..........................................................................................................................3
Answer to (i)..........................................................................................................................3
Answer to (ii).........................................................................................................................4
Answer to (iii)........................................................................................................................5
Requirement (d).........................................................................................................................7
Going Concern Basis..............................................................................................................7
Consequences for FGF’s Registration...................................................................................7
References..................................................................................................................................9

ACCOUNTING AND SOCIETY2
Requirement (a)
According to Statement of Accounting Concepts 1 (SAC 1), Paragraph 12, individual
reporting entities are needed to be identified based on the existing users who have
dependency on the general purpose financial reports for information in order to make and
evaluate decisions related to allocation of resources (aasb.gov.au 2019). Three aspects need
to be considered for identifying whether there is existence of dependent users. As per SAC 1,
Paragraph 20, the greater range of membership as well as greater extent of separation
between the management and the member indicates the presence of users dependent on the
general purpose financial reports for decision-making. This aspect is absence in case of
Treloar since there are only four members in the Board of Directors who also are responsible
for managing the company. As per SAC 1, Paragraph 21, greater political or economic
influence of an entity for the welfare of external party will lead to the existence of users
dependent on the general purpose financial report (aasb.gov.au 2019). In the provided
scenario, Treloar has economic impact on Earl Industries because it purchases the buses from
them and it also has political impact as it is the only bus service available in each small town.
Lastly, as per SAC 1, Paragraph 22, the greater the size like value of assets, turnover and
employees of the firm, the more likely the presence of users dependent on the firm. Treloar is
an SME in Australia since it does not have significant turnover, size and employees. These
imply that Treloar was not a reporting entity in 2018 (Carey, Potter and Tanewski 2014).
Requirement (b)
According to AASB 1053, Treloar will be required to prepare five types of financial
statements for the year ended 30 June 2019 after they becomes a public company. These are
discussed below:

ACCOUNTING AND SOCIETY3
Income Statement – This is one of the key financial statements that will include three crucial
types of financial information of Treloar which are revenues, expenses and profit or loss. This
is often called the statement of financial performance (aasb.gov.au 2019).
Balance Sheet – It is another crucial financial statement that Treloar will be needed to
prepare which will contain the information about the assets, liabilities and equity of the
business for a specific period of time.
Statement of Change in Equity – This is another crucial financial statement that Treloar
will have to prepare in order to show the contribution of the shareholders, movement of
equity and balance of equity at the end of the accounting period (aasb.gov.au 2019).
Statement of Cash Flows – Treloar will be needed to prepare this particular financial
statement in order to show the movement of cash of the business during a specific accounting
period. The users can know how the cash movement is from this statement (Potter, Ravlic
and Wright 2013).
Notes to the Financial Statement – This is considered as a mandatory requirement for the
public companies like Treloar where Treloar will be needed to disclose all additional
information related to the above-mentioned financial statements in order to help the users of
these general purpose financial statements to gain better understanding (Newberry 2015).
Requirement (c)
Answer to (i)
Stakeholder Theory – This particular theory is considered as the theory of organizational
management as well as business ethics that takes into consideration the impacts on the
businesses by the stakeholders such as employees, management, suppliers, lenders, local
communities and others. Edward Freeman introduce the stakeholder’s theory in the year of
1988 where he has mentioned that the stakeholder is a group that is responsible for providing