The Corporate Accounting

Running head: Corporate Accounting
Corporate Accounting
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Corporate Accounting
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Table of Contents
Introduction................................................................................................................................1
Discussion..................................................................................................................................1
Different sources of fund.......................................................................................................1
Evaluation of sources of fund................................................................................................3
Percentage of different sources of funds................................................................................4
Certain benefits and drawbacks of sources of funds..............................................................5
Various types of liabilities.....................................................................................................7
AASB 137 Provisions, Contingent Assets and Contingent Liabilities..................................8
Reporting AASB 137 Provision.............................................................................................9
Recorded assets of the companies........................................................................................10
Measurement basis of the assets..........................................................................................10
Conclusion................................................................................................................................11
References................................................................................................................................12

Corporate Accounting
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Introduction
This paper focuses on the two of the ASX Listed companies in the retail sector.
Telstra Ltd and Woolworths Ltd are the leading retail companies in Australia. The annual
report of three years of both the companies are critically evaluated to identify different
sources of fund and even the evaluation of the funds over the three accounting year. Various
changes relating to sources of funds are evaluated. Internal and external environment are
taken into consideration to analyse various sources of fund and to identify their percentage
with respect to various environment. This paper explores various assets, liabilities that has
been recorded in the financial statements, even identifies which of them comes under interest
bearing category, and which are not-interest bearing (Zeitun and Tian 2014). AASB 137
provisions relating to contingent assets and liabilities is critically evaluated to identify if this
provision has any impact on the annual reports of both the companies. Different advantages
and dis-advantages of sources of fund are discussed in details. At the end, this paper would be
examining various methods by which assets of both the companies are being valued.
Discussion
Different sources of fund
For smooth functioning of operational activities of the business there should be
adequate sources of fund and even efficient use of various funds should be done in an
effective way that will result in a profitable situation for the organization.
Woolworths Ltd.
As it is a retail business, it utilises various funds in financing operational activities of
the company. This company uses various sources of fund such as equity and preference
shareholdings, long-term and short-term borrowings, retained earnings and many more. As

Corporate Accounting
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per 2019, annual report the company uses more internally generated fund in its operational
activities. The firm in most of its financing activities uses equity capital, which comprises of
equity share capital, retained earnings and reserves & surplus. In 2018, annual report the firm
rely on external sources such as borrowings, various financial liabilities and many more by
which the firm reduce the risk factors, as debt financing is less risky compared to equity
financing. From the annual reports, it can be examined that Woolworths Ltd is trying to
maintain a balance between equity financing and debt financing to manage different sources
of fund in an efficient way thus it will be profitable for all the stakeholders of the company.
Telstra Ltd
This company uses various internally and externally generated fund for its financing
activities. Various funds that are commonly used by Telstra Ltd are equity capital, debt
capital and retained earnings. This company tries to allocate its shares to its existing
shareholders thus; in return, the shareholders invest funds in the company. Even debt
financing is done by generating sources of fund via bonds, short term and long term
borrowings, short term commercial papers, AUD private placements and finance leases and
may more. It mostly depends on debt capital as it proves to be less risky for the investors due
to which more funds are invested in the organization. The profits that are generated by the
firm are not being distributed to the shareholders as dividend rather the profits are kept as
retained earnings which are used by the company as funds for carrying out its different
financing activities.