Advanced Financial Accounting

Advanced Financial Accounting
T12019

Table of Contents
Structure...................................................................................................................... 2
Introduction.................................................................................................................. 2
Description of Accounting Concepts............................................................................. 2
Conceptual Framework and the issue of measurement...............................................4
Fundamental Qualitative Characteristics – Understanding of relevance and
Representational Faithfulness...................................................................................... 6
Conclusion.................................................................................................................... 7
References................................................................................................................... 8
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Structure
This assignment covers the accounting concepts or accounting principles used by management of
Bingo industries limited in preparation of its financial statement. Accounting concepts and
methods used by the company are explained in detail in the later part of this assignment with
suitable examples wherever required. Importance of financial reporting framework in preparation
and presentation of financial statement is explained to the users and stakeholders with relevant
and required information. Various assumptions and estimates are used by the company in
preparation of financial statement by giving proper explanation of basis of such assumptions and
estimates made. Conclusion is made on the basis of company’s usage of concepts or methods of
accounting in preparation of its books of accounts following regulatory framework of accounting.
Introduction
Books of accounts of company are made as per generally accepted accounting principles
(GAAP). Management (Board of directors) are accountable for the preparation of its financial
statements that gives fair view and complied with Australian accounting standards and
Corporation Act, 2011. Its books of accounts are prepared on the basis of accrual concept of
accounting and that method is followed on the regular basis by the company (Alexander, 2016).
Majorly three concepts of accounting like accrual concept, going concern and consistency are
followed regularly by bingo industries ltd. as per reporting framework. Bingo industries ltd
prepares its annual report to ensure that the desired expectations of stakeholders are met.
Generally stakeholders are of two types first is Internal stakeholders and second is External
stakeholders. Internal stakeholders are internally connected with the operations of the company
whereas external stakeholders are not internally connected or they are not involved in the
operations of the company. Internal stakeholders includes managers, employees, board of
directors, investors in the contrary external stakeholders includes financial institution such as
banks, government agencies, customers, suppliers. After the audit gets completed annual report of
the company is circulated to the various stakeholders to inform them regarding the company’s
operations (Bizfluent, 2017).
Description of Accounting
Concepts
There are mainly three concepts of accounting which is mandatory for the company to follow such
concepts and apply those concepts of accounting in the preparation of its books of accounts.
Those concepts are going concern, consistency and accrual. Disclosure of such accounting
concepts are not required in the financial statement of the company if they are regularly applied
by the company but disclosure is must in financial statement of the company if such accounting
concepts are not regularly applied or there is some deviation in accounting concepts adopted by
company (Bumgarner & Vasarhelyi, 2018).
Going concern accounting concept presumes that company will carry on its operations or
business for very long period i.e. an foreseeable future, in other way it can be said that entity will
not be forced to cease its business unless there is no possible option other than its liquidation
where company can’t continue its operations. Thus, in preparation of financial statement it is
assumed that entity has followed the going concern concept and if there is any risk of continuity
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