Financial Accounting Theories and Practices

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Added on 2021-01-02

Financial Accounting Theories and Practices

Added on 2021-01-02

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Financial AccountingTheories and Practices

EXECUTIVE SUMMARYThe present research will help to understand application of AASB and IFRS withimplementation of three fair based values of accounting theories. Report will focus on three fairvalue based accounting standards and its implications of these instruments in financialaccounting theories and practices followed by BAE System in its financial statements. Presentreport will analyse the treatment of financial instruments, leasing and biological assets incompany according to the regulations as well as standards of accounting theories and normsunder AASB and IFRS. BAE System plc is a British multinational company formed on 30November 1999 and operates in defence, security and aerospace industries. Approaches are oftwo types such as inductive and deductive. Inductive approach observes the elements and thenprovide theoretical framework at end of research process. Research objectives and aim can beachieved with the help of philosophy adopted by researcher. Positivism is best suited for datacollection and implementation of quantitative tools are made. Financial accounting theories arebased on assumptions, framework and a set of practices used in application of financial reportingprinciples.

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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1METHODOLOGY..........................................................................................................................1FINDINGS.......................................................................................................................................3IMPLICATION OF FINDINGS......................................................................................................9CONCLUSION..............................................................................................................................10RECOMMENDATIONS...............................................................................................................11REFERENCES..............................................................................................................................14

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INTRODUCTIONFinancial accounting theories are set of assumptions and rules which guides a companyon the basis that, it will prepare its financial statements. These theories will help in bringingtransparency in the financial statements of company which will provide accurate picture ofcompany's performance to investors, shareholders and other users of financial statements.Accounting theories significant role is to provide reasonable set of logical principles which willdevelope a general frame for the evaluation and development of sound accounting practices.AASB is an Australian agency which guides and governs the accounting practices for private andpublic sectors in Australia. The present report is based on accounting theories and practicesfollowed by BAE System Plc. in its financial statements.The report will help to understand effectiveness of financial statements presented by BAESystem for year ended 2017. The report will evaluate accounting theories and practices as well asconcepts governed by AAS(Australian Accounting Standard) and IFRS (International FinancialReporting Standards) . The report will focus on three fair value based accounting standard and itsimplications of these standards in financial accounting theories as well as practices followed byBAE System in its financial statements. Present report will analyse treatment of financialinstruments, leasing and biological assets in company according to norms and standards ofaccounting theories and regulations under AASB and IFRS.Background: BAE System plc is a British multinational company formed on 30 November 1999 andoperates in defence, security and aerospace industry. Headquarter in London, UK it operates inmore than 40 countries. BAE Systems plc has its key market in Australia, India, Saudi Arabia,United Kingdom and United States. The company is among world's largest defence organisation.METHODOLOGYResearch methodology is useful tool for assessing impact of overall financialperformance of company in an effective way. The elements of research are as follows-Research Type-The research is to be undertaken which is used to assess whether BAE Systems Plc haseffectively presented its financial statements or not for year ended 2017. In relation to this,1

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