Financial Accounting Concepts, Measurement and Qualitative Report

This report provides a comprehensive overview of advance financial accounting, focusing on the application of key concepts within the context of Blackmore's Limited. It begins with an introduction to financial accounting and its importance in decision-making, particularly for large companies. The main body of the report delves into various accounting concepts such as the entity concept, going-concern concept, money measurement concept, cost concept, dual-aspect concept, matching concept, and realization or recognition concept. It then discusses issues of measurement, including the accrual model and value relevance model. Furthermore, the report examines fundamental qualitative characteristics like relevance and representational faithfulness, emphasizing their significance in preparing useful financial information. The report highlights the importance of comparability, verifiability, timeliness, accuracy, and understandability in financial statements. The report concludes by summarizing the key takeaways and emphasizing the importance of financial accounting principles in making informed business decisions.

Advance Financial
Accounting

Contents
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
1. Description of the accounting concepts............................................................................3
2. Issue of measurement and relevant examples.................................................................5
3. Fundamental Qualitative Characteristics, Understanding of Relevance and
Representational Faithfulness..............................................................................................5
CONCLUSION.........................................................................................................................8
REFERENCES.........................................................................................................................9
I

NTRODUCTION
In the world of accounting, the concept of financial accounting is related with
recording, gathering, posting of the useful financial information and business
transaction over a specific period of time to make meaningful business decision
(Banerjee, 2012). Usually internal management use to prepare summarised financial
statement that includes balance sheet, statement of cash flow and income statement
that mainly record the company operating performance within a specific time frame.
The wider concept advance financial accounting used to be more focused in the
finance and accountingfor large companies and their consolidated financial
statement. To better understand the importance of advance financial accounting
BLACKMORES LIMITED is selected.
In this report, various accounting concepts, different issue of measurement
are discussed. In addition, Fundamental Qualitative Characteristic, Understanding of
Relevance and Representational Faithfulness are described in this report.
MAIN BODY
1. Description of the accounting concepts.
Overview of company:
It is one of the leading Australian natural health product supplier company that
used to provide variety of healthy product and services to customer that help to
deliver natural approach to health which are mainly based on our expertise in
nutrients’, minerals, herbs and vitamins (About BLACKMORES LIMITED, 2019).
Blackmore’s limited was founded in 1930s by naturopath and gained success to an
immense height as it is ASX 200 Company with a market capitalisation of $2 billion.
In Blackmore’s limited Australian Accounting Standards guarantees that the
Financial Statements and notes of the Company and the Group comply with
International Financial Reporting Standards (‘IFRS’).
It is very common that accountings are based on few necessary assumption
and condition. Thus accounting concepts are valuable postulates, condition or
assumption on which accounting records and statement in Blackmore’s are
depended. Some of the useful accounting concepts are defined below:

Entity Concept: This concept basically accepts that the financial reports and
other bookkeeping data are for the particular business venture which is unmistakable
from its owner. Subsequently, the analysis of business exchanges including
expenses and income is communicated as far as the adjustments in the company’s
financial conditions. This concept then enables the bookkeeper to differentiate
between business and personal transactions. The entity concept can be applied to
each type of organisations such as partnership, sole proprietorship, small and large
companies and as well as to specific segment such as when same business nature
firms are consolidated. In Blackmore’s limited management use to make
consolidated financial statement in order to determine the overall income and
expenses within a specific time frame.
Going-Concern Concept: A business firm is seen as proceeding in task
without proof despite what might be expected (DRURY, 2013). In view of the
sustainability and permanence of companies, monetary bookkeeping is figured
accepting that the business will keep on working for a longer period of time. The
going-concern idea prompts the recommendation that individual financial reports are
a piece of a nonstop business from a very longer period of time. In respective
company the financial report are usually prepared at end of every financial year by
applying essential accounting standard so that future statement can be easily
interpreted to make effective recommendation for improvement.
Money Measurement Concept: This concept mainly holds that bookkeeping
is estimation and correspondence procedure of the business exercises of the firm
that are measurable in financial terms. Clearly financial summaries ought to show
the cash utilized in particular time frame. It actually means that company must
indicates the purchasing power of the goods and services in an accounting year. In
particular company this concepts basically utilised in order to define that business
operation are managed by implement capital so that re-presentable goods and
services can be produced to satisfy the emerging need of customer.
Cost Concept: According to this concept, the following assets of companies
must be recorded trade cost, i.e., obtaining cost or historical expense. Historical cost
is perceived as the fitting valuation reason for acknowledgment of the procurement
of each good costs, expenses and services. The supportable cost idea infers that
since the business won't sell its benefit in that capacity there is little point in revaluing

resources to reflect current values. Moreover, for actual reasons, the bookkeeper of
Blackmore’s use to report the actual cost those are equal to market values so that
identification be difficult for other competitors (Linck, Netter and Shu, 2013).
Dual-Aspect Concept: As per the accounting concerns this concept is
consider to be the main at lies at the core of the entire bookkeeping process. The
bookkeeper records each of their business transaction influencing the wealth of a
specific company. The inquiry is—which part of this wealth for a company is
considered to be more important. Since a bookkeeping substance is known
counterfeit creation, it is basic to know to whom its assets have a place with or what
reason they serve. It is also important to know what kind of resources it controls,
e.g., cash, buildings or land.
Matching Concept: The coordinating idea in budgetary bookkeeping is the
way toward coordinating (relating) achievements or incomes (as estimated by the
selling costs of products and enterprises conveyed) with endeavours or costs (as
estimated by the expense of merchandise and ventures utilized) to a specific period
for which the pay is being resolved. Thus matching ideas should be satisfied simply
after acknowledgment idea has been finished by the bookkeeper: first incomes are
estimated as per the acknowledgment idea and afterward expenses are related with
these incomes. Expenses are coordinated with incomes, not the different way.
Realization or Recognition Concept: The acknowledgment or
acknowledgment idea demonstrates the measure of income that ought to be
perceived from a given deal. Acknowledgment guidelines help the bookkeeper in
discovering that an income or cost has happened, so it very well may be estimated,
recorded, and announced in money related reports. The acknowledgment idea
expresses that the sum perceived as income is the sum that is sensibly sure to be
understood—that will be, that clients are sensibly sure to pay (Macve, 2015).
Obviously, there is space for contrasts in judgment with respect to how certain
"sensibly certain" are.
2. Issue of measurement and relevant examples
In the business context, each type of organisation are require to apply the
conceptual framework that support in reporting of related business transition into
variable accounts. Thus the method of measuring the quality of financial reporting in
Blackmore’s with the help of valuable model that are discussed below:

Accrual model: The main importance of this model is that it mainly consider
the level of incomes administration as a substitution for the excellence of financial
reporting that are prepared at the end of a specific year. It measures and evaluate
the amount of earnings that are under the existing rules and legislation of
accounting. Accrual model undertakes that directors of Blackmore’s limited must use
optional accumulations that are accruals above which the leader can apply particular
governor in order to manage earnings within a year (Songini, Gnan and Malmi,
2013). According to this model it is primary depended on the supposition that a
Blackmore’s receiving is supposed to be the best significant element in the financial
reports. Therefore, many analysts incline to custom this when analysing overall
performance and prospective potential. Thus it can be stated that there can be as
many as approaches that support in detecting earnings in respective company but
the accrual-based models are to be the best suitable according to the nature of
business.
Value relevance model: With the help of this model the internal department
of a company are helpful to examine the connection among stock revenues and
incomes figures in demand to measure the significance and consistency of financial
reporting information during an accounting year. Value relevance model also helps to
calculate and evaluate the quality of financial reports and the collected information
that usually focused on suggestion between accounting figures and stock-market
reactions.
3. Fundamental Qualitative Characteristics, Understanding of Relevance
and Representational Faithfulness
In the recent accosting standard and as per the conceptual framework it Is
stated that financial information is one of the most crucial data that is useful when it
is represented and relevance to the main purpose for its preparations. An accountant
use to prepare valuable books and final accounts at the end of every financial year in
order to represent the faithful statements to the external shareholder and other
stakeholder. These authentic reports of Blackmore’s limited help the internal
management to make effective judgement for better improvement as well as also
gives an clear image about business dealing to the interested shareholder so that
they can make future investment decision in order to attain profitability (May, 2013. )
Therefore, it is stated that usefulness of financial information is increased in case in

the prepared financial statement of respective company are comparable, verifiable,
timely accurate and understandable that support to make meaningful future decision.
From the annual report of Blackmore’s limited the valuable fundamental qualitative
characteristic of prepared financial statement are discussed underneath:
 Relevance: This simply means that applicable data is fit for having any kind
of effect in the choices made by certified customer of company. This concept
usually requires budgetary information to be identified with a financial decision
within a period. If it is not than the information extracted from different
business transaction are consider to be useless. Budgetary data is helpful if it
has prescient values and confirmatory esteem. Such as the predictive esteem
helps clients in foreseeing or anticipating future results and on the other side
the confirmatory value empowers valuable customer to check and make sure
all those forecasts estimation of business. It implies that what is material to
one element may not be material to another. Collected information is
considered to be crucial information material in the event that it is sufficiently
critical to impact the choice of clients. Materiality is influenced by the nature
and extent (or size) of the thing offered by Blackmore’s limited to influence
their customer.
Faithful presentation: This is crucial for each type of origination to make a
meaningful and faithful presentation of these annually prepared statements that
support in future decision making (Weil, Schipper and Francis, 2013). So monetary
information in the annual related reports ought to speak for what purpose these are
usually prepared and presented. That simply means, it should demonstrate what
truly are available and what truly occurred within firm during an accounting year and
what company is planning to make future modification. There are three attributes of
faithful representation
1. Fulfilment (satisfactory or complete honesty of all essential data),
2. Lack of bias (reasonableness and opportunity from inclination
3. Free from mistake (no errors and oversights).
 Comparability: This simply mean statement of companies is compared within
company each department or other section that are operating in different
regions. In order to compare the collated compared information within the

same entity than accountant use to compare information of one year with
another accounting period so that decision are made. Such in case of
Blackmore’s the income is compared for the years 2016, 2017, and 2018.
Therefore it is observed that comparability of information through units allows
analysis of similarities and alterations among different companies and support
to make meaningful decision.
 Verifiability: According to this concept, evidence guarantees consumer that
gathered financial information speaks to faithfully what it indicates to
represent and support to bring more valuable investment decision within a
particular firm. Budgetary data is strengthened by proof and autonomous
people can check them to see whether such data is faithfully represented or
not during an accounting year in the context of Blackmore’s limited. At the end
of the day, data is obvious in the event that it very well may be examined.
Thus in respective company useful reports are easily audited well at the end
of financial year because the reports prepared within year are authentic,
appropriate and timely prepared. This display the entire information about
business transaction within year that help investors to make meaningful
decision.
 Timeliness: The concept of this business accounting concepts usually means
that timeliness support in giving financial information to main decision makers
so as to be fit for impacting their choices. It shouldn't be altogether delayed or
else it will be of next to zero esteem. Thus in Blackmore’s the reports are
mainly prepared by accountant at regular interval so that any kind of business
dealing is not left out that can hinder the decision making of clients.
 Understand-ability: The motive behind this means that understand ability of
accounting mainly requires financial data to be justifiable or intelligible to
clients with sensible information of business and financial activities of
company during an accounting year. To be reasonable, gathered information
should be introduced plainly and briefly. In any case, it is ill-advised to prohibit
complex things just to make the reports straightforward and justifiable.
Therefore all the essential financial reports in Blackmore are basically
analysed and examined at different level and are prepared by implemented
Australian accounting standard that help to reduce the chances of error,
mistake and misrepresentation. This enables the external user to have a

proper review about the statement presented to making a profitable decision
to increase own profitability.
CONCLUSION
In conclusion, it can be clearly stated that financial accounting used a specific
series of developed accounting principle. Thus companies like BLACKMORES
LIMITED used to apply the accounting principle according to reporting and regulatory
requirement of business activity such as company apply generally accepted
accounting principle. The different accounting concepts such as going concern, dual
aspects and recognition help to prepare the authentic reports that are presented to
external stakeholder to make meaningful decision. From the reports it is also
concluded that reports prepare at the end of financial year must be prepared by
applying Australia accounting standard so that they are faithfully represented and
presented.

REFERENCES
Books and Journals
Banerjee, B., 2012. Financial policy and management accounting. PHI Learning Pvt.
Ltd..
DRURY, C.M., 2013. Management and cost accounting. Springer.
Linck, J.S., Netter, J. and Shu, T., 2013. Can managers use discretionary accruals to
ease financial constraints? Evidence from discretionary accruals prior to
investment. The Accounting Review, 88(6), pp.2117-2143.
Macve, R., 2015. A Conceptual Framework for Financial Accounting and Reporting:
Vision, Tool, Or Threat?. Routledge.
May, G.O., 2013. Financial accounting. Read Books Ltd.
Songini, L., Gnan, L. and Malmi, T., 2013. The role and impact of accounting in
family business. Journal of Family Business Strategy, 4(2), pp.71-83.
Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction
to concepts, methods and uses. Cengage Learning.
Online
About BLACKMORES LIMITED. 2019. [Online] Available Through:
<file:///C:/Users/Administrator/Downloads/Blackmores%20Annual%20Report
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