Advance Financial Accounting

This document provides an overview of advance financial accounting, including various accounting concepts, measurement of assets and liabilities, and the importance of financial statements. It focuses on the case of Harvey Norman, a retail business in Australia.

Running head: Advance Financial Accounting
Advance Financial Accounting
Name of the Student
Name of the University
Author Note

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Advance Financial Accounting
Table of Contents
Introduction...................................................................................................................2
Various concepts of Accounting...................................................................................2
Conceptual Framework in Accounting..........................................................................4
Measurement of the Asset and Liabilities.....................................................................5
Issue in regards of the Measurement...........................................................................6
Financial Statement......................................................................................................7
Fundamental Characteristic of Useful Information.......................................................7
Conclusion....................................................................................................................8
Reference.....................................................................................................................9
Appendix.....................................................................................................................11

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Advance Financial Accounting
Introduction
Accounting is the concept which is been carried by the company in regards of
the financial statement of the company. As this concept help the company to know
how to present all the important information in the financial statement of thee
company. It show all the norms and regulation which are being meant in order to
make financial statement more proper and better so that the stakeholder and other
user can able to know the information of the company performance and able to take
the decision accordingly (Freeman et al., 2014). It show the company about how
they should deal with the problem in regards of the accounting and help to follow all
the rules and regulation in regards of the same. This report is been upon Harvey
Norman which is based in Australia. The company is a retail business and usually
carry its business in the form of franchise as the product in which company deal is
bedding, computer, furniture and more similar type of the products (Granof et al.,
2016). The report should about the various accounting concepts which are been
followed in the company and also the show about the measurement of the asset and
liabilities which is been done by the company and at the end it even give a brief upon
the financial information and what are the feature of the useful information from the
users point of view.
Various concepts of Accounting
1. Going Concern concept – It is the primarily and most important concepts as
it say that the company is able to carry the business for the infinite period as it
will not be affected by the death of the any owner as it will carry all its duty for
many years. As it is known to all the business have to run for infinite time so
this concept show the assumption that it will be running the business forever
(Kaplan and Atkinson 2015). So as per the company Harvey Norman is been
consider so after the annual report inspection it is found out that the company
is going concern concept in the business as if there were not have going
concern it would be mention in the financial reporting so it can be said that the
company follow this concept properly and there will no closing of the business
in coming future years.
2. Double entry concept – As per the accounting standard it said that each
entry has double affect in the balance sheet as if one is decreasing it means
the other one will be increased. The company should follow dual accounting
while preparing the financial statement of the company so that it can able an
proper accounting to the company financial statement and which will help the
financial user to take decision accordingly (Kieso, Weygandt and Warfield
2016). As per the Harvey Norman is been concern it can be that the company
have followed the dual accounting method while preparing the financial
statement of the company. So it be said that the accounting of all the
transaction is been done properly and as a result the financial statement of
the company is able to show an true and fair view.
3. Entity Concept – The company and the owner of the company are two
different entity and the financial statement of the company should be made
taking this into consideration. As it should take the owner as the shareholder
only and the business should not get affected by the owner personally as they
both are separate entity. So as per Harvey Norman annual report is been
seen it is to consider that the company is have followed this concept in the
financial statement as it have treated the owner separately and the owner

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were only liable for the amount of the profit which is been earned by the
company from the business (Libby 2017).
4. Realisation Concept – Company should follow this concept when there is
some sort sale in the business as this concept that it should only able to
record the amount of the revenue only when they able to get the money as
before the proper realisation of the revenue it should not record the same as
revenue in the business. As per the Harvey Norman is been consider it have
followed this concept in the company business as it only record the value
when it able to realised the income from the business and its certain about the
happening of the event.
5. Cost Concept – Company should record all the fixed asset in initial at the
value of which they have acquired the asset at should record in the cost. So
that the financial user will able to know the amount of cost which is been
incurred by the company on the fixed asset (Maas, Schaltegger and Crutzen
2016). As per the Harvey Norman is been consider it have followed all the
concept as it have charged proper amount of the depreciation upon the fixed
asset and also have given proper disclosure of the same in the notes on
account of the company.
Conceptual Framework in Accounting
This is the framework which gives all the guidelines to the company about
how they should able to prepare the accounting as per the rules and regulation. It
shows them all the principle which has to be followed by the company in order to
make the financial statement of the company. It contains all the details of the
accounting standard which the company have to see while preparing the financial
statement as it contain all the procedure about how the company should value the
asset and liabilities and also show them the process of the disclosure which are to
be done by the company in the notes on account (Schaltegger and Burritt 2017).
This brief them an idea about the financial statement so that the company is able to
make the statement properly so that it can able to give the better information to the
financial user of the company as they make the base of financial statement while
taking the decision in regards of the company financial statement so if the company
have properly presented the information than it will also build a good image of the
company in the eyes of the shareholder and as a result they will invest more in the
company business.
Measurement of the Asset and Liabilities
Company do the measurement of the asset and liabilities so that it can able to
show the amount in the financial statement. There are so many methods which the
company can able to use for the measurement of the same. As per the practical
knowledge there are only two popular concepts which are been used in regards of
the measurement. The valuation concepts are as follows:
1. Historical Cost – This the most traditional way for the measurement of the
asset and liabilities as in this the company to record the asset upon the value
they have spend for the acquisitions of the asset, so it means that they have
to record the asset as per the cost which is being spend by the company upon
the same (Schaltegger, Etxeberria and Ortas 2017). So as per the Harvey
Norman annual report is been concern it can be said that except of few items
for the rest the company have followed the historical cost method so it can be
said that this method is been used properly and it able to get the information

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from the notes off the account as from where it can able to know that the
company is able to use historical cost the method of valuation. The notes part
is been given in the appendix so that it can clear any doubt upon the company
measurement policy.
2. Fair Value of Accounting - Company can also able to use this accounting
method as in it being used most of the company as in this the company value
the asset and liabilities as per the market value which they able to get form
the market. It record thee original value which the company can able to get if
they go to sale the asset in the market and also the real value which they
have to pay in regards of the liabilities (Watson 2015). This help them to show
all the market value of the asset and liabilities so this help the user to get the
more proper information of the liquidity of the company as it have recorded all
the value as per the market so the user can able to judge the balance sheet
more properly and able to know whether it is right to spend the money in the
company are not as if they see that the financial statement is showing that the
company is not financially strong than they may does not invest in the
company. As per the Harvey Norman company is been consider it can be
seen that the company have valued some of its asset and investment as per
the fair value of accounting which can be sure from the notes on account as it
show that the company is able to follow the fair value accounting concept in
some asset and to make more clear about it, the notes is been given about
the fair value of accounting which is been followed by the company.
Issue in regards of the Measurement
As per the company they face many issue do the measurement of their asset
and liabilities so it is been listed about the issue which the company face:
1. Evidence – Company should not record any amount in the financial
statement of the company as it required more number of the documents so
that it can able clarify that whether the same should be recorded in the
financial statement or not as if they do not have proper document that they
may not able to know whether it should record the same in the financial
statement or not (Static1.squarespace.com 2019).
2. Matching – Company should able to know the effect of the one to another as
if the company is not able to know the dual aspects of the asset than it will not
able to record the same in the financial statement of the company. So it
should able to know how it going to effect the financial statement and then
only it will able to record the same in the financial statement of the company.
3. Income Recognition – Company should able to know the nature of the
income and whether it is been there in the ordinary course of business or not.
As if the company does not able to recognise the amount in the ordinary
course of business than it will not able to record the same as an revenue in
the financial statement of the company.
4. Consistency – Company should able to record all the transaction using same
accounting concepts and principles so it is not possible to follow one concepts
in regards of the whole accounting of the transaction so this make an problem
to the company as there not able to recognize the same and as a result it
cannot able to proper amount of measurement in regards of the asset and
liability of the company.

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Financial Statement
This are the statement which are been made by the company in regards of
the financial information. It shows all the accounting of the company as how they
should have recorded the transaction in their financial accounting. It gives an
overview about the company operation as it show various report which is been made
by the company. The information which are there in the financial statement are
helpful for the user as they get an overview about the company and able to take the
decision accordingly.
Fundamental Characteristic of Useful Information
1. Relevance - The company should provide only information which is their
useful to the financial user as they take their decision in regards of the
financial information so the company should provide the same information
properly as it should not give any non-financial information or the information
which is of no use as it will not be beneficial to the user and it will also give an
wrong image of the company so it should provide the useful information to the
user only. As per the Harvey Norman is been consider it can be said that the
company is having all the useful information in the financial statement as it
show also the notes on account so this show that the company is able to
maintain this feature by providing detail of useful information for the financial
user.
2. Faithful Presentation - Company should provide genuine information in the
financial statement as it should all the information which is in real and no false
or misleading information should be given by the company. It should only
provide the facts which are been related to the company as this help the
financial user to take the decision accordingly so if the financial information
given by the company is not fair than it will do fraud with the user so it should
always provide better information to the company financial statement. As per
the company Harvey Norman is been seen it can be said that the company
have given all the genuine figure and information in the financial statement as
it is been audited so this give a proof that the information which are there are
true and no false misrepresentation is been made.
Conclusion
On a conclusive note, it can be said the accounting is the base which help the
company to form their financial statement and also it help them by showing all the
rules and regulation in regards of the financial statement presentation. It shows them
all the necessary standard of the accounting so that the company is able to know
how to form their financial statement and how to present it in front of the
stakeholders.
It show about the company Harvey Norman which is based in Australia and
show about how the company is able to follow the accounting concept in the financial
statement and also show about the conceptual framework and the measurement off
the accounting and how it is been followed by the company. Lastly, it shows about
the issue related to the financial statement and what are the important characteristics
of the useful information in the financial statement.

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Reference
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https://static1.squarespace.com/static/54803162e4b08e1b8a472201/t/
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Appendix