Corporate Accounting: Principles and Concepts

Corporate Accounting

Table of Contents
INTRODUCTION......................................................................................................................................3
DESCRIPTION OF ACCOUNTING CONCEPTS.................................................................................3
 SEPARATE LEGAL ENTITY:......................................................................................................3
 HISTORICAL COST:....................................................................................................................4
 GOING CONCERN CONCEPT:.................................................................................................4
 MONEY MEASUREMENT PRINCIPLE:....................................................................................5
 ACCOUNTING PERIOD:.............................................................................................................5
 DOUBLE ENTRY SYSTEM:........................................................................................................6
 CONSERVATISM/ PRUDENCE:................................................................................................6
 FULL DISCLOSURE:...................................................................................................................7
 MATERIALITY:..............................................................................................................................7
CONCEPTUAL FRAMEWORK AND ISSUES RELATED WITH MEASUREMENTS:....................8
FUNDAMENTAL QUALITATIVE CHARACTERISTICS:.....................................................................9
CONCLUSION:.......................................................................................................................................10
REFERENCES:.......................................................................................................................................11

INTRODUCTION
The following assignment shows all the accounting principles and concepts very clearly.
The accounting concepts and principles are briefly discussed and shown below. The
principles and concepts of accounting are used by the organizations to calculate and
prepare their financial books and records. The project also discusses the Australian
listed company Mirvac group. The Mirvac group is a leading firm working in the field of
real estate in Australia. The impacts and effects of the accounting principles and
concepts on the Mirvac group will be discussed in the following report. The examples
from Mirvac group will be given in the principles. The preparation and evaluation of
principles will be shown in the following assignment with the help of annual reports of
the Mirvac group.
DESCRIPTION OF ACCOUNTING CONCEPTS
The group or set of rules and policies which are followed and applied by an organization
while preparing financial books and recording the different transactions in different
accounts. To maintain uniformity, firmness, and flexibility in the records of transactions
these set of regulations that is accounting principles and concepts are to be followed
(Thuronyi and Brooks, 2016). There are different types of principles and concepts
registered under the companies act, some of these principles are briefly discussed and
shown beneath:
 SEPARATE LEGAL ENTITY:
The concept explains that the organization that is the business and the owner of the
business are distinct from each other, that is they are different and are not considered
same like business and businessman are totally separated from each other. Thus even
the transactions and any financial entry is done for the business and not for the
business man, for example: if Mirvac group purchases goods it would be recorded from
the point of view of Mirvac group and not from the point of view of the CEO. The equity
invested by the businessman or the owner is called capital that is like a loan for the firm
or the organization. Thus the interest paid to the proprietor on capital is referred to as

an expense for the organization as it reduces the profit of the firm. Just like that the
money used for personal use by the owner is known as drawings. Thus it is hereby
clarified that the proprietor and the business are two different parties and due to which a
company has its own seal (Paolella and Durand, 2016).
 HISTORICAL COST:
The assets purchased by any organization or business are recorded on their original
value that is their purchase price, the price at which these assets were bought or
purchased is to be recorded in the financial books of the organization since the
purchase price was in the past this concept is named as historical cost. Any changes,
ups, and downs, or any kind of change in the policies will not affect the purchase and
recorded price. Hence the price at which the assets are recorded that is the historical
cost will never change. For example: if Mirvac group purchases any plant of five
hundred thousand dollars then it will be recorded in the records at the same price only
any changes in future in the market price or any increase or decrease in the selling or
market price will not make any effect on the recorded price that is the historical cost. But
the depreciation on that cost will be charged accordingly every year (Mehrotra and Ott,
2015).
 GOING CONCERN CONCEPT:
This concept states that the owners may come and owners may go but the company
goes and goes forever. That means the business when incorporated is not started to
wind up or close early, instead, it is incorporated to run lifetime, the owners and CEO's
of the organization, firm or business may change and come and go but the business will
not wind up (Lang, et al., 2018). As said above the business and owner are separate, so
even if the owner dies, gets bankrupt, goes insane, or is jailed, the business will not
stop it will continue for its lifetime, the new owner will come. As per this concept, the life
of the business is forever and hence the assets are also recognized for lifetime and
depreciation on those assets is charged for the whole of its life. Hence the firm or the
organization will not dissolve any time. For example, If Mirvac Group closes one of its
branch and continue their business operations in another branch, then the company is a