Accounting Concepts in Context of Ramsay Healthcare

Accounting Concepts IN CONTEXT OF RAMSAY HEALTHCARE
Module Number

Table of Contents
Introduction...........................................................................................................................................2
1. Identify and describe the accounting concepts used..........................................................................2
2. With reference to the conceptual framework, and the debate over measurement in accounting.
Using your allocated company discuss the issue of measurement and provide examples......................4
Conceptual framework and debate over measurement.......................................................................4
Measurement applied at Ramsay Health Care...................................................................................5
3. As fundament qualitative characteristics of relevance and representational faithfulness in relation to
the assets and liabilities recorded in the books account.........................................................................5
Which kind of qualitative characteristic is more important for valuation of assets and liabilities......7
Recommendation..................................................................................................................................7
Conclusion.............................................................................................................................................9
References...........................................................................................................................................10

Introduction
With the introduction of 21st century, new technologies have been introduced all over
the world. World has become one global village. New technologies, introduction of internet,
open communication worldwide, easy access to information has led to complexities in many
systems. With the information being shared and passed at so many platforms, the need for the
transparency, easy understanding has led to formulation of some general concepts and
principles among various things. The accounting and financial world is no different. With
introduction of so many systems and software for accountancy, the need has been arose for
common general standards within the industry and financial world. IASB AND GAAP are
two such bodies which govern all the concepts, principles and standard being introduced and
amended from time to time. In the following report, the study of these concepts, principles
and conceptual framework would be done in the context of RAMSAY HEALTHCARE
(Ramsay Health care. 2018).
Ramsay Healthcare is founded by Paul Ramsay in 1964, in Sydney, Australia. It is a provider
of private healthcare and specialises in surgery, psychiatric care and rehabilitation. It is
present in countries like Australia, UK, France, Indonesia and Malaysia and have presence in
total 221 locations with over 30,000 employees. It has partnered with a private and non
governmental health system named Ascension in 2018 to venture in new global supply chain
venture. Ramsay is largest healthcare provider with almost 100 operational health facilities in
Australia (Ramsay Health Care., 2018).
1. Identify and describe the accounting concepts used
Accounting authorities in all over the world formulates the accounting concepts which leads
to the uniformity in data presented by the financial team of company. Financial team uses
these concepts as a base to prepare and present their company financials. The companies not
only at national but also at international level need to present their financial reports and
therefore need the international standards to follow (Ramsay Health care. 2018). These
standards are formulised by the international bodies like GAAP and IASB. These concepts
act as the foundation for accounting systems and adopted by majority of companies. Ramsay
Healthcare being a multinational company with presence in almost all the major countries
follows these concepts and framework religiously. The concepts being in use by Ramsay are
listed below (Ramsay Health care. 2018).

a) Accounting cost concept: This concept is also known as historical cost method. In Ramsay,
the cost charged in the expenses for the material purchased is usually the cost incurred for the
acquisition of that material at the time of purchase. It includes transportation cost, installation
cost and miscellaneous cost. It does not consider the market price of the material otherwise
amends have to be made every year to include market prices in accounts. And balance sheet
would have to be updated (Ramsay Health care. 2018).
b) Accrual concept: it states that company need to put the transaction in accounts when it has
legal right to receive it and not when the actual cash is received. The revenues in the
organization is put in balance sheet when they are realised and the same is true for expenses
as well. The expenses and revenues both should be recorded as per their realization time and
year in same accounting year (Ramsay Health care. 2018).
c) Matching concept: this concept being used in Ramsay states that the expenses and revenues
of company in one accounting period should be matched. That is for every expense
transaction recorded, there should be equal revenue coming in balance sheet. This helps in
correction of any error made during the preparation of financial statement and the balance
sheets.
d) Realisation concept: the concept is widely acceptable in all organizations for preparing the
financials. It states that the organization can recognize their revenues in accounts only when
they have right to receive it. The cash receipts becomes a non requirement if the revenue is
certainty. This helps the accounts department to put revenues in the financial year of
realization (Ramsay Health care. 2018).
e) Dual aspect concept: the dual affect simply states that every transaction have two affects and
it affect the credit as well as debit side of balance sheet. The expense incurred in one side is
always followed by the revenue on the other side. It helps in formation of balance sheet
equation. This is followed to reduce the errors and mistakes in the process. However, by
using it, accountant could easily determine the issues and inherent errors in recording of the
financial data in the books of account.
f) Going concern concept: This concept is the most basic and applied in Ramsay as well
clarifies that a business always assumed to go on for indefinite period of time. It is assumed
that the business is not going to shut down in near future making losses for the investors. This
concept helps in building confidence among shareholders, investors and employees. Because
of this concept the expenses of of any big investment is distributed among the years and not
in just one financial year (Ramsay Health care. 2018).