Corporate and Financial Accounting Analysis of Rio Tinto and BHP Billiton

Running Head: Corporate and Financial Accounting
Corporate and
Financial
Accounting
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Corporate and Financial Accounting 1
Abstract
The paper analyse the different heads present in the owner’s equity and liability head of the
organizations. Rio Tinto and BHP Billiton are the two companies discussed in the below
mentioned paper. Three year analysis of both the organization is elaborated to identify the
changes in the heads of the balance sheet. Further, elaboration of movement of these heads will
help the prospective people to analyse the growth of the company in the business environment.
Advantages and disadvantages of different sources of funds is discussed in the paper with the
analysis of three different types of organization prevailing in the business environment.

Corporate and Financial Accounting 2
Contents
Introduction......................................................................................................................................2
Part A...............................................................................................................................................2
Items recorded under owner’ equity section................................................................................2
Movement of each item with reason............................................................................................3
Items recorded under liability section..........................................................................................4
Movement of each item with reason............................................................................................5
Advantages or disadvantages of each sources of fund................................................................7
Part B...............................................................................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

Corporate and Financial Accounting 3
Introduction
The objective of the report is to discuss the accounting trends present in the Australian
companies Rio Tinto and BHP Billiton. Both the organizations are market leaders and
competitors present in the mining and petroleum industry of Australia. Further, below mentioned
report is segregated into two parts, the part A of the report highlight the details about recording
equity and liability section in the financial statements of the company and the movement of each
and every item recorded. Further, the second part of the report evaluate concepts used by small
proprietary, large and reporting organizations and the implication of the classification of the
companies in these three different ways. Analysis of the company Rio Tinto and BHP Billiton
evaluates the ways in which different aspects of the company present in equity and liability
section has fluctuated in a time period of three years (Hill, Price, and Ruch 2018).
Part A
Items recorded under owner’ equity section
Owner’s fund refers to fund that elaborates the proportion of the total value of company’s assets
that can be claimed by the owner. These funds are the net worth of the organization that is a part
of the assets of the organization after all the liabilities are paid off. The heads present in owner’s
equity fund for the company Rio Tinto are common stock, additional paid-up capital, retained
earnings, and accumulated other comprehensive income. Common stock in the equity fund refers
to the fund that involves the amount of shares that possess voting rights in the business. These
shares are also called ordinary shares. This stock represent the ownerships of the shareholders in
the company. Major stocks of the company are issued in this format only. Further Additional
paid-in capital refers to the amount over and above par value of shares (Fleckenstein, and
Longstaff 2018).
This is the amount that comes after deducting the par value from the issue price. Par value is
minimum amount of a share and issue price is the price at which share are sold. It refers to the
amount that is left with the organization after providing dividend to the stakeholders.
Accumulated other comprehensive income refers to the unrealized gains or loss for the