Conceptual Framework for BHP Billiton

Running Head: Accounting Theory
Accounting
Theory
Conceptual Framework for BHP Billiton
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Accounting Theory 1
Contents
Background......................................................................................................................................2
Scope................................................................................................................................................2
Preliminary analysis findings..........................................................................................................3
List of evidences..............................................................................................................................4
References........................................................................................................................................5

Accounting Theory 2
Background
The organization chosen for the analysis is BHP Billiton that is a large-scale petroleum
extracting organization. BHP is an Australian organization that is present in the metal and
mining industry. The company is a dual listed public company that has its headquarter in
Victoria. The organization was found in the year 1885 and is the largest mining company present
in the world in terms of market capitalization. The company earned revenue of US$52.8
billion in the previous year that accounts the profitability enjoyed by the organization. Talking
about mining industry of Australia, it should be noted that this industry plays a significant role in
economy of the country as export, royalty, employment etc. activities are implemented in the
environment (BHP 2018).
The industry has delievered overall $250 billion in exports to the Australian economy in the year
2018. So, it can be analysed that the business functions performed by the organization BHP are
large scale and extensive. The company works with around 10000 employees in 25 nations. The
company is listed on Australian Stock Exchange along with London Stock Exchange and
Johannesburg Stock Exchange. The company was reshaped in the year 2001 after the merger of
Broken Hill Proprietary and Billiton. The merger of both the organization helped the
organization to become one of the world’s largest diversified resource organizations. The
company is world’s largest producer of silver, uranium, aluminium, manganese, copper, iron ore,
nickel, and titanium minerals. The organization has market capitalization of worth USS$ 166
billion and net operating cash flow of US$17.9 billion (Bell 2019).
Scope
The accounting theory chosen to analyse the functions of the company BHP Billiton is
‘Conceptual framework of accounting’. Conceptual framework refers to the process of ideas and
objectives that help the organization to create consistent set of rules and standards for them. This
process gives effectiveness to the accounting activity of the organization as rules and standards
set the functions, limit and nature of the financial accounting system and statements of the
organization. This process provides strong and conceptual frameworks to the organization so as