Accounting Concepts and Measurement in Syrah Resources Ltd.

This report analyzes the accounting concepts and measurement techniques used by Syrah Resources Ltd. It discusses the dual aspect concept, going concern concept, money measurement concept, accounting period concept, cost and revenue concept, and verifiable objective concept. It also explores the issue of measurement and the importance of relevance and representational faithfulness in financial statements.

Running head: SYRAH RESOURCES LTD.
SYRAH RESOURCES LTD.
Name of the Student
Name of the University
Author Note

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Executive Summary
Accounting can be understood to be a crucial part of an organization and any firm which aims
to ensure success in the long run would be required to see to it that, it is successfully being
able to meet with the different accounting standards as well as the needs so that it is able to
attain overall prosperity. The report seeks to identify the different accounting concepts which
are being adopted by the different businesses and in line of this, the aspect of the issue of
measurement and the faithful representation and relevance has been discussed. The firm
chosen for the purpose of the analysis is the Syrah resource Ltd.

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Table of Contents
Introduction.................................................................................................................................3
About the company.....................................................................................................................3
Analysis.......................................................................................................................................3
Description of accounting concepts........................................................................................3
Conceptual framework and Issue of Measurement................................................................5
Understanding Relevance and Representational Faithfulness...............................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................8

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Introduction
The subject of accounting can be rather understood to be a complex project which
takes into consideration the different rules, regulations and related frameworks which are
required to be undertaken in lieu of ensuring accurate and faithful financial statements for a
firm (Appelbaum et al. 2017). In line of this, it can be considered rather crucial for a firm to
ensure that all the accounting statements of a firm consider the accounting concepts and
framework as present. The primary aim of the report can be outlined as to understand the
manner in which the different companies portray the accounting information and to identify the
different accounting concepts which are used by them in order to ensure long term success of
the firm (Ogneva, Piotroski and Zakolyukina 2018). The accounts of a firm are based on
certain necessary assumptions or certain conditions upon which the subject of accounting has
been based and the primary objective of the accounting concepts lie to postulate, assume or
set conditions upon which the accounting records and statements shall be based upon. The
report seeks to outline such accounting concepts used by the firm and then underline the
issue of measurement and the Representation faithfulness which a statement is required to
reflect. The firm which has been chosen for the purpose of analysis is the Syrah Resources
Limited.
About the company
The Syrah Resources Limited can be described as an Australian based industrial
minerals and Technology Company which is owned and constructed by the Balama Graphite
Project in Mozambique (Syrahresources.com 2019). The different operations in Balama
commenced at the beginning of the year 2018 where Syrah was ramming up the production
to the nameplate capacity of 350ktpa. The company follows a strategy of rapidly producing
and commencing the qualification of the Battery Anode Material project in the United States
Analysis
Description of accounting concepts
As mentioned previously, the accounting concepts can be understood to be certain
assumptions based on which the accounting statements are largely prepared. The different
accounting concepts which have been clearly made use of in the financial report of the Syrah
Resource Limited can be understood to be as follows:
Dual aspect concept
As per the dual aspect concept, every business transaction which exists tends to have
a dual impact. This means that if A begins a business with cash of $10000 then there exists
two aspect of the transaction which relate to the Asset account and the Capital account
(Cannon 2019). This reflects that the business gains an asset of $10000 and then in the same
manner, the business owns $10000 to A as well. In lieu to this it can be rightfully understood
that the Syrah resource Limited makes use of the dual aspect concept of accounting and
successfully lays down both the sides of the transaction in the report. This means that, for
every credit, the company has made a corresponding debit and in line of this, the different
financial statements like the Income statement, Balance sheet and the Cash flow has been
prepared accordingly (Syrahresources.com 2019).
Going concern concept
Under the going concern aspect it can be rather taken into an assumption that the
business will continue for a fairly long period of time unless it will get into a state leading to
liquidation. It can be assumed that as per the assumption, the accountant will not take into
account any forced sale value of the assets while undertaking a value of them. Hence, the
accountant will be required to concern that, the business will continue forever. The Surah
Resource Limited, undertakes to attain the Capital risk management and in lieu of this, it can

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be rightfully understood that the firm tends to ensure that they are able to manage the capital
in the right manner and thereby safeguard its ability to continue the operations as a going
concern (Finkler, Smith and Calabrese 2018). This will help the firm to prove to its
shareholders and help the firm to maintain the adequate cost of capital.
Money measurement concept
As per the particular accounting concept, it can be rightfully understood that, every
aspect shall be recorded in terms of the money. It needs to be noted that each transaction will
be recorded in monetary measures and in case there exists certain events or transactions
which cannot be expressed in terms of money then, it shall not be recorded in the books of
accounts even if they are of considerable importance to the business. It needs to be
understood that the purchase as well as the sales of goods and payments of expenses along
with the receipt of income can be largely understood to be the monetary transactions which
are required to be recorded in the books of accounts(Kaplan and Atkinson 2015). However,
the events like the death of a particular executive, the resignation of a manager cannot be
largely expressed in terms of money. In the financial statements of the firm, Syrah Resource
and the notes to them, it can be strictly observed that the firm makes use of the money
measurement concept and had recorded only those transactions which are subject to
monetary measurement. The transactions which are not subject to monetary measurement
will not be present in the report (McKinney 2015).
The Accounting Period Concept
According to the Accounting Period concept, it can be largely understood that, the
books of accounts need to be prepared at a regular interval of time and it is at the end of this,
that the income statement and the financial position statement are prepared to know the
results and the different resources which are utilized in a business. Hence, all the resources
are required to be prepared as per the prescribed standard and within the specific time period
(Cannon 2019). The Syrah resource tends to follow the concept of Accounting period strictly
and the reports and other such documents of the firm are prepared in line of the period
January to December. The particular annual report which has been taken up for the
consideration can be stated to be belonging to the one year for the period ending as on
December 2018. Therefore, in regard of this, it is also required to be understood that, this
helps in acute measurement of the firm and its operations at large (Syrahresources.com
2019).
Cost and revenue concept
The particular accounting concept is largely based on the period concept which states
that to ascertain the profits as made by the firm in a certain period, any business would be
required to ensure that they are successfully being able to assess the right amount of profit.
The profit making objective is considered to be the most crucial objective of a business and
hence, by aligning the overall expenses of a business with the costs, the right period has to
be chosen ideally. Syrah Resource is one of the ASX companies and hence, it ensure that it
is being able to provide adequate transparency in the report. Hence, in line of this, the profits
which have been incurred for the company has been done so in line of the cost and revenue
incurred in the same year. Moreover, it can also be observed that, the firm has aligned its
profits pertaining to the operations of this year only.
Verifiable Objective concept

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The verifiable objective concept tends to state that in order to ensure long term
success of a business, the accounting transactions and related financial statements must be
prepared in line with adequate support of the objective documents (Hoyle, Schaefer and
Doupnik 2015). These documents comprise of the contracts, invoices, correspondence,
vouchers, bills as well as cheques. The reports of the firm have been accompanied with
adequate notes to the accounts with respect to which it becomes considerably easier to
understand the manner in which the firm has been able to gain considerable success. In line
of this, it can be understood that, all the records are present with Syrah.
Conceptual framework and Issue of Measurement
The conceptual framework of an accounting statement goes a long way in helping any
firm to ensure that they are successfully able to see to it that their financial needs are met with
and in addition to this, they will also be required to see to it that there exist adequate
measurements to bring about the report in the financial statements of the firm. According to
Burtonshaw-Gunn (2017), the measurement concepts in the field of financial reporting can be
understood to have a great need. It can be understood to be the key role of accounting to
depict the economic phenomenon in numbers and to bring about acute measurements in the
financial statements. However, it becomes important for the business to understand that,
there does not exist any conceptual definition of the accounting measurement and that there
also do not exist any measurement to guide the standard setters choice relating to the
conceptual base and related definition of the measurement of accounting.
Hence, it tends to become considerably difficult for the business to ensure that, they
will be able to come up with adequate ways in which they will be successfully able to identify
the appropriate measures to be adopted and the manner in which the financial statement
shall be prepared (Kimmel et al. 2016). Till date the overall focus of the measurement has
been on the individual assets as well as the liabilities, however, these amounts are also
considered to be essentially crucial to the overall financial statement and reporting. Any
change in the overall measurements of the assets, liabilities and other such mediums during
the particular reporting period can be understood to be fundamental in nature as it determines
the overall income and the expenses as well.
A solution to this problem for the business can be understood to be the fair value
measurement. The fair value measurement is understood to be more consistent in nature and
helps in achieving the overall objective of the financial reporting (Whittington 2016). The
aggregate of these fair values have a meaning and hence, may prove to be a good solution to
the different problems being faced by accounting. In line of the operations of the Syrah
Resource Limited, it can be largely understood that the organization has been making use of
the concept of fair value (McKinney 2015). The concept of fair value has been used by the
organizations at various instances and these instances can be largely understood to be the
instances related to the, estimation of the net receivables and the value of the payables. In
addition to this, the consolidated entity also measures the cost of equity settled transactions
with the employees in the basis of the fair value (Schaltegger and Burritt 2017). In addition to
this, the Page 93 of the report mentions that all the conceptual framework aspects and the
measurements have been undertaken by the firm on a Fair value basis. It goes on to mention
that when an asset or a liability, whether financial or non-financial is measured at a fair value,
for the purpose of recognition, then, the fair value is largely based on the price that would
have been received to sell a particular asset or paid to transfer a liability in a manner such
that an orderly transaction takes place between he market participants at the mentioned
measurement date (Kimmel et al. 2016). The company has further mentioned that for the
purpose of the Fair value measurement, it uses various assumptions and various techniques
have been outlined by the firm to make effective and efficient use of the same.

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Understanding Relevance and Representational Faithfulness
In order to ensure that a particular financial statement is able to be of utter importance
to the stakeholders and to ensure that, they are useful in nature, the financial statements of
the firm must embody some qualitative characteristics (Bekaert and Hodrick 2017). The two
primary fundamental characteristics which are required to be possessed by the financial
statements can be understood to be as follows:
Relevance: The aspect of relevance states that the financial information can be considered to
be as relevant in case it comprises of the capability influence the decision of the users as
present (Pandey 2015).
Faithful representations: The faithful representation tends to state that the financial
information needs to be complete in nature and free from any error which might be present.
Faithful representation
The faithful representation concept of the financial statements can be largely
understood to be the concept relating to the face that a financial statement needs to
accurately reflect the overall condition of a particular business. For instance, in case the
company reports in its statements that it has $100000 as accounts receivable, then in such a
case, the particular amount should indeed have been present on the particular date (Hoyle,
Schaefer and Doupnik 2015). This faithful representation needs to be present to all the parts
of a financial statement and be inclusive of the results of the operations, the overall financial
position of a firm, the cash flows as present and the reporting entity. In addition to this, the
faithfulness of the report must reflect the follows:
 Complete: The reader which is largely available to the reader needs to provide a clear
picture of the results, and reflect the accurate financial position of the firm. This will
help them to make the right decisions in the right manner.
 Error free: In line with this, it can also be understood that the financial statements of
the business need to be error free in nature which means that, the different financial
statements are required to be without any uncertainty or mistakes as this may report as
a fraud (Finkler, Smith and Calabrese 2018).
 Unbiased: The financial statements of the organization are required to be unbiased in
nature. This means that, they should not amplify the results which are present or try to
worse them.
With respect to the relevance of the different financial statements present, it needs to
be rightfully understood by the business, that the financial statement is required to be relevant
in nature and be useful with respect to which the decision making which has to be undertaken
by the users can be assisted. It has to only contain the most important information and in line
of this, it becomes relevant. For instance, if the company discloses an increase in the
Earnings per share by a dollar then, this information is required to be reported accordingly to
the investors as it is useful to them. The relevance is greatly impacted by the materiality of the
information.
For instance, in the case of the Syrah Resources, it is required to be understood that,
the firm has faithfully represented the overall condition of the company and in line of this, it
has been able to successfully ensure that the statements are complete and accurate (Barr
and McClellan 2018). This has then been supported by the auditor repot attached.
Additionally, the report comprises of only that information or data which is required to be
useful for the long term of the firm and beneficial for the investors. The financial statements of
the firm have been prepared in a fair and efficient manner.

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Conclusion
Therefore, from the given analysis, it can be rightfully be mentioned that, the concept
of Accounting can be understood to be a crucial one and in line of this, it becomes crucial for
any organization to ensure that if it aims to attain success in the long run, it would be required
to follow all the accounting standards as well as concepts thoroughly. The report outlined the
accounting concepts which were used by the Syrah resource and was then followed by the
issue of measurement which also takes place. The latter half of the report focuses on the
qualitative requirements of the statements and discussed the same in line of the annual
reports of Syrah Resource Limited.

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References
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John Wiley & Sons.
Bekaert, G. and Hodrick, R., 2017. International financial management. Cambridge University
Press.
Burtonshaw-Gunn, S.A., 2017. Risk and financial management in construction. Routledge.
Cannon, M.L., 2019. An Exploration of Key Accounting Concepts Through Case
Studies (Doctoral dissertation, University of Mississippi).
Finkler, S.A., Smith, D.L. and Calabrese, T.D., 2018. Financial management for public,
health, and not-for-profit organizations. CQ Press.
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
Kimmel, P.D., Weygandt, J.J., Kieso, D.E. and Trenholm, B., 2016. Financial Accounting.
Wiley Custom Learning Solutions.
McKinney, J.B., 2015. Effective financial management in public and nonprofit agencies. ABC-
CLIO.
Ogneva, M., Piotroski, J.D. and Zakolyukina, A.A., 2018. Accounting fundamentals and
systematic risk: Corporate failure over the business cycle. Chicago Booth Research Paper,
(14-31), pp.14-37.
Pandey, I.M., 2015. Essentials of Financial Management, 4th Edtion. Vikas publishing house.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues,
concepts and practice. Routledge.
Syrahresources.com 2019. Annual reports [online]. Available at:
http://www.syrahresources.com.au/application/third_party/ckfinder/userfiles/files/
20190329%20Annual%20Report%20secured.pdf (Retrieved on: 23 May. 2019).
Whittington, G., 2016. Accounting and economics. The New Palgrave Dictionary of
Economics, pp.1-6.