Corporate Financial Accounting Assignment 2022

CORPORATE FINANCIAL
ACCOUNTING

ABSTRACT
Corporate accounting can be referred to as special branch of accounting which comprises
accounting for companies, drafting of financial statements, interpretation of financial results of
companies etc. The present study provides discussion relating to movement in equity and
liabilities of Wesfarmers and Woolworths Group. It has been assessed that liabilities of
Woolworths Group have fluctuating trend comparatively as significant increase and decrease has
been analyzed in same. In terms of equity parameters, the decrease has been accessed in case of
Wesfarmers. Thus it is recommended to reconstruct the capital structure in order to provide
adequate return to shareholders. Further concepts of small proprietary company, large
proprietary company and reporting entity has also been discussed in which it has been assessed
that each company, inclusive of Small Proprietary Company, is required to have enough
accounting or financial transactions records and enough to enable to pile up financial statement
when required.

TABLE OF CONTENTS
Introduction......................................................................................................................................4
Part A...............................................................................................................................................4
Explanation of items recorded under equity section of both the companies...............................4
Explanation of movement in each item under owner’s equity section of both the companies. . .5
Assessment of liabilities section of Wesfarmers and Woolworths..............................................6
Explanation of movement in each item under liabilities section of both the companies............7
Advantages and disadvantages of each source of funds used by each company.........................8
Part B.............................................................................................................................................10
Large proprietary company........................................................................................................10
Small proprietary company........................................................................................................11
Reporting entity.............................................................................................................................12
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

INTRODUCTION
Corporate finance is referred to as an area of finance which assists in analyzing sources of
funding in order to increase the organization’s value to shareholders (Eisenschmidt and Schmidt,
2018). The specified subject assists in taking adequate capital investment decision through
application of various strategies. The present study provides details relating to assessment of
equity and liabilities of Wesfarmers and Woolworths group. In order to assess the movement in
liabilities and equity of both the company’s balance sheet of recent three years have been
analysed in an appropriate manner. Eventually, advantages and disadvantages of sources applied
by each company has been discussed. Further, discussion has also been provided relating to
concepts of small proprietary company and large proprietary company and reporting entity to
assess the implications of their classification adequately.
PART A
Explanation of items recorded under the equity section of both the companies
Woolworths is Australia’s largest supermarket chain. It operates approximately 995 stores and
makes efficient attempt to provide superior services, variety, value and convenience to its
customers. The main purpose of the group is to develop a better experience together to make
their customer’s life better (Woolworths Annual Report. 2017). It equity section comprises
capital equity, reserves, retained earnings and non-controlling interest. Equity represents the
amount of capital which has been financed through help of common shares. In January 2018
Non-executive director had provided plan to encourage and facilitate ownership of board
members. The specified plan provided auto mechanism for participants to acquire shares.
Reserves comprise hedging reserve, foreign currency translation reserve, remuneration reserve,
asset revaluation reserve and equity instrument reserve. Retained earnings represent the amount
of profit which has been held by company instead of paying it to shareholders. Non-controlling
interest is also referred as minority interest, representing ownership position where shareholder
owns less than fifty per cent (Leuz and Wysocki, 2016).
Wesfarmers Ltd has a diversified portfolio business which deals in department stores, energy
distribution, chemicals, fertiliser, safety products etc. (Wesfarmers 2017 Annual Report, 2017.).