JB Hi-Fi Financial Performance Analysis
Added on 2020-05-11
10 Pages2591 Words142 Views
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Running head: ACCOUNTING IN BUSINESS Accounting in BusinessName of the StudentName of the UniversityAuthors NoteCourse ID
ACCOUNTING IN BUSINESS1Purpose of financial accounting statement: The general purpose of the financial accounting statement is to give informationregarding the results of the operations, financial position and cash flow of the company. Theinformation that is stated in the financial statements is to make aware the users of thefinancial statements regarding the distribution of the resources. An assertion can be statedthat lenders make use of the entire set of the information in the financials to understandwhether they must extend the credit to the business or limit the sum of credit that has alreadyextended. The purpose of the financial statement for the investors is to make the use of theprice per share at which they are interested to invest. The purpose of the financial statements for the government is to tax the businessbased on the assets and income and they can generate the information from such financials.Additionally, a union can base their position of bargaining on the apparent ability of thebusiness to pay. Therefore, such kind of information can be obtained from the financialstatements. In other words, the financial statements possess number of purposes, dependingupon who the reader is and which financial statement is being perused. Accounting practices and Revenue Recognition adopted in Jb-Hi-Fi:The accounting practices adopted for the preparation of the general-purpose financialstatements complies with the “Australian accounting standards” and interpretations that isissued by the board of the “Australian Accounting Standards and the Corporation Act2001”. The financial statements of the Jb Hi-Fi comply with the international financialreporting standards that is issued by the International Accounting Standard Board(Jbhifi.com.au, 2017). The accounting practices that has been implemented in the preparationof the fiscal statements is based under the convention of historical cost, excluding thefinancial assets and the liabilities combined with the certain classes of plants and equipment’s
ACCOUNTING IN BUSINESS2that are measured in terms of the fair value. The critical accounting assumptions andestimations of Jb Hi-Fi is used during the preparation of the financial statements that isconstantly evaluated by the company and take account of the historical experience and otherfactors. The accounting assumptions and estimations comprises of the upcoming proceedingsthat might create a fiscal effect on the company are considered practical under the currentcircumstances. Jb Hi-Fi measures the revenue based on the fair value of the sum of considerationsthat is receivable or received. The sum of amounts that is disclosed in the form of revenuerepresents the net amount of returns, amount of trade allowance, repayments and amountsthat is collected by the company on behalf of the third parties. Jb Hi-Fi recognizes revenue atthe time when the sum of proceeds can be measured dependably. It is likely for the companythe future economic welfares would flow in the company and the specific criteria of thebusiness has been met. The company bases its estimates in terms of the historical results by taking account ofthe type of customers, the type of transactions together with the specific of eacharrangements. Revenue derived from the sales is recognized when the company hastransmitted the purchaser the noteworthy risks and reward associated with the ownership ofgoods. On the other hand, when the company acts in the form of agent instead of beingprincipal in the transaction the revenue recognized represents the net amount of commissionthat is made by the company. Revenue that is recognized from the contract of services isidentified by the reference to the share of amenities which is provided in agreement with thecontract. Proceeds derived from the time and physical agreements is identified at thecontractual rates in the form of labour hours delivered and direct expenditure that areoccurred.
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