Report on Corporate and Financial Accounting 2022

RUNNING HEAD: CORPORATE AND FINANCIAL ACCOUNTING
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Sources of Finance
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System 0032
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Corporate and Financial Accounting
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Abstract
The aim of this report is to understand different sources of finance that are used by the
companies. For that two companies are selected that are listed on ASX that are Rio Tinto and
BHP Billiton ltd. To understand these owners’ equity items are explained and total liabilities
items are explained. Further movement in last three years in these sections is elaborated with the
reason. Further part gives insight about the small and large proprietary company and the
reporting requirements of these companies.

Corporate and Financial Accounting
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Table of Contents
Abstract........................................................................................................................ 1
Introduction.................................................................................................................... 3
Part A........................................................................................................................... 3
i. Owners’ Equity...................................................................................................... 3
ii. Movement............................................................................................................ 5
iii. Total Liabilities.................................................................................................. 6
iv. Movements........................................................................................................... 8
v. Advantages and Disadvantages...................................................................................... 9
Part B......................................................................................................................... 10
Reporting Entities....................................................................................................... 10
Conclusion................................................................................................................... 12

Corporate and Financial Accounting
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Introduction
Sources of funds are the part of corporate financing as the companies use different ways to raise
the capital to run their business or to operate at the large scale. The two main areas that are
related to corporate financing are working capital and capital budgeting. The concept of capital
budgeting is related to sources of fund that companies used in order to finance investment. These
sources are either through owners fund or through borrowed fund. The main sources of finance
for the companies are debt, equity, retained earnings, working capital loans, venture funding and
term loans etc (Datta and Fuad, 2017). This report consists of understanding the sources of funds
that Rio Tinto and BHP Billiton use. These help to practically understand the concept of sources
of funds and the movement in the company’s liabilities and equity from last three years. Further,
the concept of small and large proprietary and their reporting entities is analyzed.
Part A
i. Owners’ Equity
In the balance sheet of the company, owners’ equity is the section that represents the capital
invested by the owners in the business during the year and the owners fund at the end of the year
excluding drawings. It is the amount that company raise through issuing shares to the public; the
owners are called shareholders of the company. The owner’s sources of finance are classified in
the sub heads as retained earnings, unrealized gains and common stocks or shares.
Rio Tinto Balance sheet (Owners’ Equity)
Total equity 2016 2017 2018
Redeemable
Preferred Stock
- - -
Non-
Redeemable
- - -
Common stock 3.35B 3.22B 2.9B
Retained
Earnings
17.51B 17.56B 21.22B