Analyzing Accounting Research Articles

This assignment requires students to carefully examine and analyze a selection of peer-reviewed accounting research articles. The provided list of references covers diverse topics within accounting, including financial accounting, management accounting, auditing, sustainability accounting, and the impact of technology on accounting practices. Students need to demonstrate critical thinking skills by identifying key themes, methodologies, findings, and implications of each article.

Running head: ACCOUNTING
Accounting
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Answer to Question 1......................................................................................................................2
Introduction..................................................................................................................................2
Comparing the result of Wesfarmers and Coles..........................................................................2
Analysing the Divisional performance of Coles..........................................................................3
Conclusion...................................................................................................................................5
Answer to Question 2:.....................................................................................................................5
Answer to Question 3:.....................................................................................................................7
Reference.......................................................................................................................................12

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Answer to Question 1
Introduction
The Coles Supermarkets were acquired by Wesfarmers in the year 2008. The business of
the division is to provide fresh food groceries, fuel, liquor and financial services. The company
has more than 21 million customer transaction in a week (Edmonds et al., 2016). The Coles
division currently operates 2475 retail outlets and has 106000 team members. In the following
section the aim is to analyse the financial result of Coles from 2016 to 2017 by studying the
annual report of Wesfarmers and comparing the result of both the company.
Comparing the result of Wesfarmers and Coles
The revenue of Coles have always showed an upward trajectory. However, in the year
2017 the earnings of Coles have fallen for the very first time since its acquisition by Wesfarmers.
The stiff competition in the market has been attributed to the slowdown of earnings of Coles.
Wesfarmers on the other hand have continued performing exceptionally well despite the stiff
competition (Al Dallal, 2016). The revenue of Wesfarmers for the financial year ending on 30th
June, 2017 has increased by 3.82% from the revenue of the company earned in the previous year
ending on 30th June, 2016. The company has earned a gross revenue of AUD 68,015 million in
the financial year ending on 30th June, 2017 compare to AUD 65,512 million in the previous year
ending on June 30, 2016. Compare to 3.82% overall growth of revenue of Wesfarmers the
revenue of Coles from sale of foods and liquor which is used as a crucial measure of financial
performance of the company, only grew by 1% in the financial year ending on June 30, 2017.
Till 2016 the company, i.e. Coles, showed an average growth of 4.1% per year in revenue
(Darlington & Hayes, 2016). Thus, compare to the growth of 4.1% that the company was able to
achieve till the year 2015/16 the mediocre growth of 1% is certainly a cause for concern of the

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management of the company. The performance of Wesfarmers over the last year can be further
assessed with the help of the profits that the company earned. In the current year ending on June
30, 2017 the company earned a gross profit of AUD 21,656 million compare to AUD 19,987
million that the company earned a year before, i.e. in 2016 income year. The rate of gross profit
in 2017 at 31.84% which was higher from the 30.51% of gross profit of 2016 further indicates
the improvement in performance of the company in the last year (Liebhold et al., 2016).
Analysing the Divisional performance of Coles
The earnings before interest and taxes of Coles for the financial year 2016/17 decreased
by almost 13.5%. In the year 2016/2017 the company’s income before interest and taxes was
$1.61 billion, lower by 13.5% from the earnings before interest and taxes of the company for the
year 2015/16. This is the first time that the company has experienced a decline in earnings before
interest and taxes since the year 2008, i.e. the year in which it was acquired by Wesfarmers (Yi
et al., 2015). The decline however was not completely unexpected as the major competitor of the
company, i.e. Woolworth, has made a huge investment to lower its prices which have affected
the revenue of the company. The food sales of Woolworth has increased substantially following
its major spending for lowering the prices of the products and offering by the company
(Klingenberg, 2015). The statement showing trend analysis of the financial performance of the
Coles is provided below:
Statement showing Divisional Performance of Coles
Particulars 2017 ($m) 2016 ($m) Change % change
Revenue 39217 39242 -25 -0.06%
Earnings before interest and tax 1609 1860 -251 -13.49%
Segment Assets 21140 22122 -982 -4.44%
Segment Liabilities 4245 4273 -28 -0.66%
Capital Employed 16586 16541 45 0.27%
Return on Capital Employed 10% 11% -0.015 -13.39%

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Capital Expenditure 811 763 48 6.29%
Table 1: Divisional Performance
(Source: Coles Supermarkets, 2018)
The overall financial performance of Wesfarmers was far better than the financial
performance of Coles. The operating revenue of Coles has declined by -0.06%. On comparing
the operating revenue of Wesfarmers increased by 3.82% even during the stiff competition that
the company experienced subsequent to the price reduction by Woolworths Limited (Goetsch &
Davis, 2014). On analysing the above statement it can be seen that segment assets of the
company has declined by 4.44%. It can be seen that the reduction in the segment liability of the
company has declined by 0.66%. It can be seen that the overall capital employed of the company
has increased by 0.27%. The increase in the net capital employed is a positive indication for the
company. The table above shows the Return on capital employed of the company. The ROCE is
the financial ratio that indicates profitability and the efficiency of the company (Kwak et al.,
2015). It can be seen that ROCE was 10% in 2017 and it was 11% in 2016. The ROCE has
declined by 1% during the year. The capital expenditure includes investments that are made for
acquiring long term fixed assets (Kamp et al., 2016). On analysing the above statement it can be
seen that the capital expenditure of the company has increased in the division from $811 million
in 2017 to $763 million in 2016. The increase in the capital expenditure by $48 million. The
capital expenditure in the Coles division of the company has increased by 6.29%. It indicates that
the business is making investment in the division and aims to increase profit from this division
(Tooch, 2015).

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Conclusion
Based on the above analysis it can be seen that the revenue of the company has declined
in the period 2016 to 2017. The analysis of the financial result of the company shows that the
earnings before interest and taxes has declined 13.49%. The result shows that there is a decline in
the segmented assets and segment liability. The analysis shows that the capital expenditure and
the return on the capital employed of the company has declined. Therefore based on the
discussion it can be said that the performance of Coles has declined but it is expected that the
company will improve the performance.
Answer to Question 2:
In accordance with the sustainability report 2017 of Wesfarmers which is also the 20th
sustainability report of the company the company has scored 78 out of 100 in sustainability index
of Dow Jones. The assessment by the Dow Jones sustainability indices of the efforts of the
company to continue on the path of sustainable development has established the company as the
global leader as far as the concept of sustainability is concerned (Jaber, 2016).
The company is on a mission to provide safe work places for the firm animal to ensure
that they are safe and the risk of injury in the work place and the premises is minimum. The
company has continuously increased the amount of spending to institute measures in the work
places to ensure safety of the firm animals. The company has make it mandatory to conduct
periodical audit of firms and animal husbandry to ensure that the facilities in these firms and
animal husbandries are of required quality to ensure safety of the animals (Sithole &
Abeysekera, 2017).

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The company has provided financial assistance and grants to more than 100 farmers. This
has been possible due to the sale of more than 2.6 million litres of milk funded solely by the
funds of the farmers. Thus, the increase in mil production has made it possible for the company
to bring more farmers into the net of financial assistance and grant. The maintenance of health
and safety of the cows and other firm animals are crucial to the growth and success of the
company (Hui & Chang, 2016). The on farm innovation and improvements have been made with
the use of $20000 made available by the company to the farms. Coles, one of the important
constituents of the Wesfarmers Group, has a branded welfare policy focussed towards reduction
of close confinement of animals such as battery cages and sow stalls. Since January 2013 the
company has made it a point to use cage free eggs and the fresh pork offered by the company has
been salt free since January, 2014 (García, 2017).
The five policies which are the foundation of Coles’ approach to farm animal welfare are as
following:
I. Hunger and thirst: Ensuring freedom of the farm animals from hunger and thirst by
ensuring proper facility at the farms for the animals (Uyar & Güngörmüş, 2016).
II. Discomfort: Ensuring freedom from discomfort to the animals of the farms by
providing them with all medical treatments as necessary to ensure they are healthy
and safe in the farms (Napitupulu, 2015).
III. Pain, injury and disease: Taking all necessary steps to ensure that the farm animals
are free from pain, injury and disease. Providing timely vaccination and medication to
the farm animals has helped the company to achieve this objective (Henderson et al.,
2015).

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IV. Allowing to express normal behaviour: The animals have been given freedom to
express themselves by disallowing small cages and battery cages in the farms. They
have been provided with natural habitat to enjoy the freedom and express their natural
behaviour (Silva et al., 2017).
V. Fear and distress: Necessary steps have been taken to provide the firm animals with
an environment which is free from fear and distress (Napitupulu & Situngkir, 2016).
The company has a producer steering committee to review the policies of Coles in relation
with each key species to assess the results of farm program assessments of the company. Thus,
the sustainability of Wesfarmers in the area of farm animal welfare can be defined as effective
and efficient from the perspective sustainable development of the company (Warsono, 2017).
Answer to Question 3:
a)
Adjusted journal entries
Particulars
Debit
amount
Credit
amount
Depreciation on plant and machinery A/c $26,250.00
Accumulated Depreciation $26,250.00
(Being depreciation transferred to accumulated
depreciation)
Capital $26,000.00
Cash $26,000.00
(Being cash withdrawn from business for personal
expenses)
Insurance expenses $1,500.00
Unexpired insurance $1,500.00
(Being insurance unexpired recorded)

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Rent $11,000.00
Accrued rent $11,000.00
(Being Accrued rent recorded)
Wages $6,160.00
Accrue wages $6,160.00
(Being entry for accrued wages recorded)
Sales return $42,000.00
Accounts receivable $42,000.00
(Being sales return recorded)
Profit and loss $20,000.00
damage goods $20,000.00
(Being goods damaged recorded)
b)
Statement showing Income statement
Particulars Amount Amount
Revenue:
Sales 675,000.00
Less: Sales return 42,000.00
633,000.00
Less: Direct expenditure:
Cost of goods sold 392,000.00
Less: damaged goods returned 20,000.00
372,000.00
Gross profit 261,000.00
Less: Expenditures
Salaries and wages 83,160.00
Rent 44,000.00
Utilities 5,200.00
General expenses 2,800.00
Insurance premium 1,500.00
Damaged goods 20,000.00

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Depreciation 26,250.00
182,910.00
Net profit 78,090.00
c)
Statement showing financial position
Assets:
Particulars Amount ($) Amount ($)
Accounts receivable 3,200.00
Inventory 180,300.00
Prepaid insurance 2,000.00
Land 200,000.00
Plant and equipment at cost 120,000.00
Less: Accumulated depreciation 101,250.00
18,750.00
404,250.00
Liabilities
Unearned revenue 52,300.00
Capital 310,000.00
Add: Net profit 78,090.00
388,090.00
Less: Drawings 89,300.00
298,790.00
Accrued expenses:
Wages 6,160.00
Rent 11,000.00
17,160.00

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Accounts payable 30,300.00
Bank overdraft 5,700.00
404,250.00
d)
Closing journal entries:
Particulars
Debit
amount
Credit
amount
Profit and loss account 78,090.00
Capital 78,090.00
(Being the net profit transferred)
Capital 26,000.00
Drawing 26,000.00
(being the drawing adjusted against capital)
Accumulated depreciation 101,250.00
Plant and equipment at cost 101,250.00
(Being the accumulated depreciation adjusted against plant and
equipment)

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Profit and loss account 162,910.00
Salaries and wages 83,160.00
Rent 44,000.00
Utilities 5,200.00
General expenses 2,800.00
Insurance premium 1,500.00
Depreciation 26,250.00
(Being all the expenditures adjusted against the profit and loss
of the business)
Profit and loss account 372,000.00
Cost of goods sold 372,000.00
(Being the cost of goods sold transferred to profit and loss
account)

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Reference
Al Dallal, J. (2016). Applications for Accounting of Inherited Object-Oriented Class
Members. World Academy of Science, Engineering and Technology, International
Journal of Computer, Electrical, Automation, Control and Information
Engineering, 10(4), 706-709.
Darlington, R. B., & Hayes, A. F. (2016). Regression analysis and linear models: Concepts,
applications, and implementation. Guilford Publications.
Edmonds, T. P., Edmonds, C. D., Tsay, B. Y., & Olds, P. R. (2016). Fundamental managerial
accounting concepts. McGraw-Hill Education.
García, N. (2017). Understanding Mattessich and Ijiri: A Study of Accounting Thought.
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper
Saddle River, NJ: pearson.
Henderson, S., Peirson, G., Herbohn, K., & Howieson, B. (2015). Issues in financial accounting.
Pearson Higher Education AU.
Hui, Q., & Chang, S. (2016, March). Accounting Safety System in E-Commerce and Its
Application. In Measuring Technology and Mechatronics Automation (ICMTMA), 2016
Eighth International Conference on (pp. 63-66). IEEE.
Jaber, M. Y. (Ed.). (2016). Learning curves: Theory, models, and applications. CRC Press.

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Kamp, A., Morandi, F., & Østergård, H. (2016). Development of concepts for human labour
accounting in emergy assessment and other environmental sustainability assessment
methods. Ecological Indicators, 60, 884-892.
Klingenberg, C. P. (2015). Analyzing fluctuating asymmetry with geometric morphometrics:
concepts, methods, and applications. Symmetry, 7(2), 843-934.
Kwak, W., Shi, Y., Lee, C. F., & Lee, H. (2015). Group Decision-Making Tools for Managerial
Accounting and Finance Applications. In Handbook of Financial Econometrics and
Statistics (pp. 791-840). Springer New York.
Liebhold, A. M., Berec, L., Brockerhoff, E. G., Epanchin-Niell, R. S., Hastings, A., Herms, D.
A., ... & Yamanaka, T. (2016). Eradication of invading insect populations: from concepts
to applications. Annual review of entomology, 61, 335-352.
Napitupulu, I. H. (2015). Impact of Organizational Culture on the Qualty of Management
Accounting Information System: A Theoritical Approach. Research Journal of Finance
and Accounting, 6(4), 74-83.
Napitupulu, I. H., & Situngkir, A. (2016). Integrated Management Accounting Information
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Indonesia. International Business Management, 10(23), 5643-5650.
Silva, P. L., Santos, J. F., & Vieira, I. (2017). Teaching Accounting and Management Through
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and Applications: Concepts, Methodologies, Tools, and Applications, 424.

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Sithole, S., & Abeysekera, I. (2017). Accounting Education: A Cognitive Theory Load Theory
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Tooch, D. E. (2015). Effective accounting for small businesses: a guide to business and personal
financial success. Business Expert Press.
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