Accounting Theory and Issues

Running head: ACCOUNTING THEORY AND ISSUES
Accounting Theory and Issues
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1ACCOUNTING THEORY AND ISSUES
Executive Summary:
The current report is based on analysing the requirements of conceptual framework and to
ascertain whether Caltex is in compliance with the requirements of the general purpose
financial reporting.
The term conceptual framework explains that the objectives and concepts of general purpose
financial reporting is viewed as the practical tool that helps in developing the standards that is
based on the constant concepts.
The report evidently lay down that the preparers of financial statement consistently develops
the policies when there is no applicable transaction or events or when the standards enables
the choice of accounting policy.
The chosen company for the assignment is Caltex that has an iconic presence in Australia as
the fuel transport company. Caltex imports, refines and markets the lubricants and fuels that
satisfies the one third of the Australian conveyance fuel requirements.

2ACCOUNTING THEORY AND ISSUES
Table of Contents
Introduction:...............................................................................................................................3
Conceptual Framework:.............................................................................................................3
Critical analysis and discussion:................................................................................................4
Theory appropriate for the company:.....................................................................................4
Measurement requirement:.....................................................................................................5
Measurement of asset:............................................................................................................5
Measurement of Liabilities:...................................................................................................6
Measurements of Incomes:....................................................................................................7
Measurement of Expenses:....................................................................................................8
Compliance with the fundamental qualitative characteristics:...................................................9
Compliance with enhancing qualitative characteristics:..........................................................12
Users of financial reports:........................................................................................................13
Requirements relating to basic knowledge:.............................................................................14
Requirements of GPFR (General Purpose Financial Reporting):............................................14
Caltex accounting Issues:.........................................................................................................15
Recommendations:...................................................................................................................15
Conclusion:..............................................................................................................................15
References:...............................................................................................................................17

3ACCOUNTING THEORY AND ISSUES
Introduction:
Caltex Australia is a honoured and iconic Australian company. Caltex over the years
has become country’s foremost supplier of fuel transport having a network of around 1900
company owned or affiliated sites. The multifaceted supply chains safely and consistently
deliver the fuel with the growing choice of suitability goods and services to greater than three
million consumers every week (Caltex 2018). Caltex imports, refines and markets the
lubricants and fuels that satisfies the one third of the Australian conveyance fuel
requirements. The company has the history that dates back to early 1900 and has come a long
distance to more than 4700 employees with a largely convenient retail network covering
Australia.
Conceptual Framework:
The conceptual framework lay down the concepts which facilitates the preparation
and presentation of financial statements for the external users. The conceptual framework
helps the AASB in developing the future Australian Accounting Standards and evaluating the
current Australian Accounting Standards (Aasb.gov.au 2018). The framework helps the
preparers of financial statements in implementing the Australian Accounting Standards by
dealing with the topics which is yet to be a part of subject of Australian Accounting
Standards. The framework helps the auditors in creating an opinion as to whether the
financial statement complies with the Australian Accounting Standards.
The conceptual framework is helpful in forming an accounting policies when IFRS
standards are not pertinent to a specific transaction and particularly it provides assistance to
the shareholder’s in understanding and interpreting the standards (Deegan 2013). The central
purpose of conceptual framework is to deliver the financial information that are useful for the
users in making decision. This includes purchasing, selling and holding the debt or equity