Corporate Accounting: Sources of Funding and Equity and Liabilities Analysis

Running Head: CORPORATE ACCOUNTING
CORPORATE ACCOUNTING
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1CORPORATE ACCOUNTING
Abstract
The development of the products as well as expansion into the new markets requires
funds at some or other point of time. The company uses internal reserves for
satisfying their necessity for the cash or the company uses the other purposes and
financing when firm has to acquire capital from the other sources. For the evaluation
of the companies, it is quite important for looking at the balance of funding major
sources. The company would be missing the growth prospects if it would not be
borrowing funds. Hence, it is concluded different sources of fund are used by the
company as per their requirement and it is reported in the company’s financial
statement and small, large and reporting entities has different requirement of
regulatory and compliance.

2CORPORATE ACCOUNTING
Table of Contents
Introduction...............................................................................................................................3
Discussion................................................................................................................................4
Part A.....................................................................................................................................4
Items Recorded under section of Owner’s Equity......................................................4
Movements in each item recorded in Owner’s equity section..................................6
Items Recorded under section of Liabilities................................................................7
Movements of Each Item recorded under Liabilities section....................................9
Relative Advantage for Disadvantages of each fund source selected by
companies........................................................................................................................9
Part B...................................................................................................................................10
Types of Company........................................................................................................10
Implications of types of the companies in terms of compliance and Reporting
requirements..................................................................................................................11
Conclusion..............................................................................................................................12
Reference...............................................................................................................................14

3CORPORATE ACCOUNTING
Introduction
The sources of company’s fund are used by the business organizations under
different situations. Funding of the organization is the most important act to provide
the financial resources that is usually in the form of money or the other values, for
instance financing the project, program or need, which is done by the company.
Corporations, most often requires for arising the external funding or the capital for
the expansion of their businesses into the new emerging markets or the locations for
the investment in the research & developments or for keeping off the competition. As
the organizations aims for using the profits from operations that are ongoing of the
business for the funding the projects, they are more favorable towards seeking the
investors or the external lenders. However, despite of the differences that exist
among thousands of companies across the various sectors of industry, there is
availability of only few fund sources. These sources of the finance include equity,
debentures, liabilities, retained earnings and so on. The classifications of these
sources are based on the ownership and control, time as well as their sources of
generation (Barakat 2014).
Hence, under this assignment, discussion will be done on two companies of
ASX listed that is BHP Billiton and Rio Tinto recording of items of equity and the
liabilities. Moreover, discussion will be done on the movements of each item for each
section and relative advantages or the disadvantages of the fund sources used by
the company. Further, explanation will be done on the concepts of the small
proprietary company, large proprietary company as well as reporting entity and the
implications of the classifications of thesecompanies in terms of the requirements of
the reporting as well as compliance.