Understanding Accounting Concepts and Measurement Issues in Advanced Financial Accounting

Running head: ADVANCED FINANCIAL ACCOUNTING
Advanced Financial accounting
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ADVANCED FINANCIAL ACCOUNTING
Table of Contents
Introduction:..............................................................................................................................2
Discussion:...............................................................................................................................2
Description of accounting concepts:.....................................................................................2
Measurement issue and conceptual framework:................................................................6
Fundamental qualitative characteristics- Understanding of relevance and
representation faithfulness:....................................................................................................9
Conclusion:.............................................................................................................................11
References list:......................................................................................................................12

ADVANCED FINANCIAL ACCOUNTING
Introduction:
The report elucidates the understanding of the accounting concepts and the
guidance provided by such concepts in formulating the accounting policies by the
organization. The conceptual framework and the issues faced by the organization in
measuring different accounts is also presented in the report. In addition to this the
fundamental qualitative characteristics in relation to the representation faithfulness
and understanding of relevance is also demonstrated in the report. All the concepts
have been explained in reference to the company listed on the ASX. The chosen
company for the purpose of analysis is Woolworths group Limited which is the
largest retailer operating in Australia with some of the most trusted and recognized
brands. It is a diverse group of retail business on a journey of becoming organization
that is led by purpose and focuses on key priorities that helps in improving the
satisfaction of customers (Woolworthsgroup.com.au 2019). The preparation and
presentation of the financial statements of every organization is based on the
principles of the accounting concepts along with forming the estimates and
judgment. Evaluation of the concepts and the relevance of the financial information
have been done by collecting the facts and figures from the financial report of the
latest financial year.
Discussion:
Description of accounting concepts:
In this section of report, the concepts of accounting and its implication for
determining the assumptions and measurement along with estimates have been
illustrated by referring to the financial report of Woolworth’s group limited. Accounting
concepts can be defined as the assumptions, postulates or the conditions that is

ADVANCED FINANCIAL ACCOUNTING
used for basing the accounting statements and records of the organization. There
are several concepts of accounting and some specific accounting concepts are used
by the organization depending upon their suitability and the environment in which it is
carrying out its operation. Basically, accounting concept is the set of rules that are
followed by the organization in preparing their financial statements.
The accounting policies of the Woolworths group provides an explanation of
the basis on which the consolidated financial statements have been prepared and
the measurement of the financial liabilities, assets, comprehensive income and
derivative liabilities and assets are done. There is consistent application of the
accounting policies by the group in all the periods that is presented in the financial
statements. In addition to this, the application of the accounting policies are done by
making judgment, estimates and assumptions impacting the amounts reflected in the
financial report. All the judgments, estimates and assumptions are based on
historical experiences that are adjusted for the factors that are reasonable under
certain circumstances and for the current market conditions. A high degree of
complexity is involved in forming the judgment and estimates along with carrying
significant risk of material adjustments in the carrying value of liabilities and assets.
From the financial report of Woolworths limited, it can be observed that there
is a separate section of the specific accounting policies that are adopted by the
group with each of them is described in the respective notes to the financial
statements. Some of the accounting policies in relation to the particular account are
discussed below:
Inventories- Valuation of inventories by Woolworth’s group is done at lower
of either net realizable value or cost. Determination if net realizable value is done as