Corporate Accounting HI5020 Assignment: Funds, Liabilities, Assets

This report analyzes the financial practices of two leading ASX-listed retail companies, Woolworths Ltd and Telstra Ltd, focusing on their sources of funds, liabilities, and assets over a three-year period. The assignment examines how these companies finance their operations, differentiating between equity and debt capital, and explores the evolution of their capital structures. It delves into the merits and demerits of different funding sources, including liabilities categorized as current and non-current. The report also addresses the application of AASB 137, focusing on provisions, contingent liabilities, and contingent assets, along with the asset classifications and their measurement bases as presented in the companies' balance sheets. The conclusion emphasizes the importance of transparent financial reporting frameworks and the strategic use of capital structures to ensure smooth business operations.

Corporate Accounting

Introduction
 Two of the leading ASX Listed companies of
Australia are taken into consideration. Bothe the
companies are into retail business. The main
objective is to analyze the three years financial
annual report to identify various sources of funds
that are used in the operational activities of the
business.

Sources of Funds
 The funds which are utilized by a business is
important as the same are used for financing the
operations of the business. In most of the business,
capital which is used is made up of equity and debt
capital but it is to noted that the same depends on
the nature of operations of the business.

Evaluation of different sources
 The funds which is used by a business changes over a time
period which is to adjust to the requirements of the
business.
 The business of Woolworths ltd shows that the
management has made changes in the capital structure
over the years and there can be lots of reason for the same.
 In case of Telstra Ltd, the firm is using more amount of
debt financing to carry out its investing activities.

Merits and Demerits of funds
 The capital structure, which is used by the business
of Woolworths ltd and Telstra ltd, are quite similar
but the mixes, which is used by the businesses, are
different.
 Each of the funds have different impact on the
capital structure of the companies and have various
types of merits and demerits.

Liabilities
 The liabilities of Woolworth ltd and Telstra Ltd are classified as
current and non-current liabilities and the same are reflected in
the balance sheet of the entity.
 The current liabilities for the Woolworth Ltd includes creditors,
which are the main current liability, and includes short-term
borrowings.
 The current liabilities of the Telstra Ltd includes, short term
borrowings, creditors, tax payable, revenue received in advance
and many more. The short-term borrowings of the company
while derivative financial liabilities are interest bearing.

AASB 137 Provision
 The provisions, which are stated in AASB 137
“Provisions, Contingent Liabilities and Contingent
Assets”, clearly shows the definition of provisions,
contingent liabilities and contingent assets and
when the management of the company should
recognise the same.

Assets
 The assets are also covered in the balance sheet,
which is prepared by the companies, and both the
companies clearly presents the assets that are
possess by the business during the period.
 The assets of current nature are liquid in nature and
can be converted to cash as quickly as possible.

Conclusion
 Lastly, it concludes the reporting framework,
which is applied by the senior managers for
the reason ensuring that a level of
transparency is maintained in the operations
of the business. The discussion shows the
capital structure which is used by the
business of Woolworths ltd and Telstra Ltd for
the purpose of ensuring that the operations
of the business are smoothly conducted.