ACCT6003: Financial Accounting Process - Business Structure Analysis

This report analyzes the financial accounting process in the context of an entrepreneur, Xiaojing Wu, starting a business in Australia. It compares the advantages and disadvantages of sole proprietorships and partnerships, detailing the regulatory requirements for setting up a proprietary company with reference to ASIC and the Corporations Act 2001. The report also discusses financing options such as equity shares, bonds, and bank borrowings. Furthermore, it contrasts the pros and cons of being a listed company versus a private company, highlighting access to resources, management efficiency, and the regulatory requirements for listing on the Australian Stock Exchange (ASX), including profitability, investor base, asset requirements, and financial reporting obligations.

Running head: FINANCIAL ACCOUNTING PROCESS
Financial Accounting
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
First Issue...................................................................................................................................3
Second Issue...............................................................................................................................4
References..................................................................................................................................5

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First Issue
Xiaojing should consider the advantages and disadvantages of a proprietor company
as compared to a partnership business before he starts his business in the Southern Australia.
A sole proprietor company is an individual owner’s company where the decision and
important actions in regard to a firm is taken solely by an proprietor. The fast and quick
decision making process in terms of dealing with the resources of company and lower
overheads is the key advantages of a proprietor company in contrast to a partnership business.
Further, the key disadvantage of the sole proprietor company in contrast to a partnership
company is that it suffers from high financial risk where losses and profits earned are solely
attributable to the proprietor. However, in the case of a partnership business losses and profits
gets divided and the financial risk associated with each gets reduced (Sahut and Peris-Ortiz
2014).
Xiaojing needs to follow and adapt to various companies rules and regulations while
setting up a small proprietary company. The firm should be registered using the ASIC Form
201 which is present online in the ASIC website. The name of the company and the nature of
the company must be concisely mentioned, operations of the business and the location under
which the activities would be taking place would be the basic information’s required by the
ASIC for registration of the company. In regards to following Company and Corporate Laws
Xiaojing would be adhering to the “Corporations Act 2001” and be following the necessary
rules of regulation of the Australian government (Asx.com.au 2018).
The director of the company will be having a right in making independent and fair
decision in the context o the company for a sustainable and better growth of the company.
The director of the company will be obligation in fulfilling all the policies and guidelines of

4FINANCIAL ACCOUNTING PROCESS
the company so that the operations and the ethical framework in a company is well
maintained (Legislation.gov.au 2001).
Financing the operations and investing activities of Xiaojing could well be addressed
through issuance of Equity Share from the Australian Stock Exchange or through issuance of
bonds or bank borrowings (Hoyle 2014).
Second Issue
Xiaojing as a listed company would be having its pros and cons as compared to a
small private company and the same could be well addressed in terms of resources,
management and efficiency. Xiaojing as a listed company would be definitely having greater
and better access to financial and human resources which can optimally bring success and
growth of a company. However, on the other side and efficiency, better utilisation of
resources and prompt decisions are some of the key highlights of a small private limited
company which gets missed in larger companies (Humphery-Jenner and Suchard 2014).
As a listed company Xiaojing can raise capital from the Australian Stock Exchange in
the form of Initial Public Offering for raising equity capital by issuing equity or ordinary
shares of the company.
The regulatory requirements as per ASX in terms of listing of an company is that the
profitability of the company on aggregate basis should be around A$1 Million in the last
three years of time frame and a minimum of 3000 non-affiliated investors should be a part of
the company (Asx.com.au 2018). Further the requirement in terms of assets of the company
should be at least A$4 million and a market cap of around A$ 15 Million stands as a
benchmark. Further, other legal and other financial reporting requirements like reporting the
financial performance of the company quarterly, semi-annually and annually are some of the
basic requirements from the Australian Stock Exchange (Legislation.gov.au 2001).

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References
Asx.com.au. (2018). Listing Requirements. [online] Available at:
https://www.asx.com.au/listings/listing-with-asx/listing-requirements.htm [Accessed 23 Mar.
2019].
Hoyle, S., 2014. Demand is fixed for new investment options. Professional Planner, (61),
p.32.
Humphery-Jenner, M. and Suchard, J.A., 2014. Should Exchanges Allow Larger and More
Discounted Placements? An Analysis of Changes to ASX Listing Rules. An Analysis of
Changes to ASX Listing Rules (October 7, 2014). CIFR Paper, (017).
Legislation.gov.au. (2001). Corporations Act 2001. [online] Available at:
https://www.legislation.gov.au/Details/C2018C00424 [Accessed 23 Mar. 2019].
Sahut, J.M. and Peris-Ortiz, M., 2014. Small business, innovation, and
entrepreneurship. Small Business Economics, 42(4), pp.663-668.