Financial Accounting Analysis of Telstra Group's 2016 Annual Report

ACC 201 – Financial Accounting
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Contents
Introduction:....................................................................................................................................3
Task 1: Analysis of expenses.......................................................................................................4
Task 2: Accounting policy...........................................................................................................7
Task 3: Notes to the 2016 financial statements............................................................................9
Conclusion:....................................................................................................................................14
References:....................................................................................................................................15
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Introduction:
The financial accounting report has been prepared in order to help the users in understanding the
different concepts and issues related with financial accounting in an enterprise. For the purpose
of this report a company has been chosen whose name is Telstra. Telstra has been a leading
telecommunication and technology company which has a worldwide business environment. The
market price of the share of company is currently trading at adequate rates. The report will
include analysis of various expense reported in the income statement of the enterprise and the
different method of classification for these expenses. The report will also include a description
about the various issues related with accounting estimates and policies s reported in the annual
report 2016. Also there will be information about various aspects covered in notes to accounts of
the company which will be evaluated appropriately in this report.
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Task 1: Analysis of expenses
a. Determine whether the expenses are classified by nature of function.
The cost classification for the preparation of income statement can be done in different ways
depending on the nature or the purpose of expense classification. The different types of costs are
classified according to logical groupings. The groups are created in accordance with the easy
classification of each and every cost.
By referring to the annual report for the year ending 2016 for Telstra Group it can be established
that the company ash recognized and classified all its expense except finance cost based on
nature of expenses (Scott, 2015). The reason associated with adopting this classification method
is that the method assist in classifying more accurately the type of cost and it reflects the type of
operations that the company undertakes during the accounting year.
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