Financial Accounting Principles and Analysis Major Stakeholders

Question: Describe about the Financial Accounting Principles and Analysis for Major Stakeholders. Answer: 1. The major stakeholders in the debate of the health warning are Mary Bender; she is the marketing manager of Big Business Tobacco, Randall Hedges; he is the public relation manager in Big Business Tobacco. In the above debate both of them are truly fulfilling theirs as per their position in the company. Mary Bender is concentrating on the company's bottom line which is her role in serving the company. Whereas, Randall Hedges concentrating on the corporate responsibility factor. Corporate responsibility is very much important for the company. This helps the company securing itself from many legal responsibilities. He is also looking to the fact of health hazard which is most importantly very much necessary as per complying with the fact of looking for a health of the customers. Nowadays, implementation of CSR activity has been very important for any company. CRS activity helps the company from getting affected by any legal or societal problems (Navi 2012). 2. The ethical issue helps a company in bringing the system of moral and principles into conflict. Ethics is that branch of study which includes the way in which the people should live based on same morality. The ethical issue deals in distinguishing what is correct and what is incorrect, what is bad and what is good and what are the correct responsibilities one should follow (Navi 2012). . Here, Randall Hedges the public relation manager of BBT urges for including the warning on the pack of cigarettes will help in complying with the ethical issue as well as fulfilling the CSR activity in their company. The inclusion of this warning will also help the in fulfilling the legal aspect of the Australian law. He also has looked through the medical findings which have forecasted the thousands of deaths from due to cigarette smoking specifically in the developing countries. So from the above discussion most importantly the ethical issue arise ignoring to the health factor of the customers and concentrating on the only fact of the bottom line, i.e., Profit of the company. (Navi 2012). 3. Randall Hedges is thinking of the about the fact of health hazard' which will enable him to fulfill to the fact of CSR and Ethical Issue factor. Being a public relation manager, he is trying to fulfill his responsibility by thinking about the company as well as the society. The health warning inclusion factor is helping in fulfilling his responsibility for thinking of the society, so that by reading the warning on the pack of cigarette at least some of the people in the society can get saved from not having the cigarette (Navi 2012). CSR is defined as the self-integrated business model which is related to the norms and regulation of the company. The CSR factor is helping the company in the long-term by concentrating on the concerns for their clients. Implementation of health warning will also help the company in complying with the Australian law. If the company is fulfilling the CSR activity, it will help the company in fulfilling the and achieving its long-term goal (Navi 2012). 2 .a. Yes, Phil and Josephine are fully liable for the mistake they have conducted. They should not have overlooked the tax liabilities for the companies. The payment of tax is a very important duty of each and every individual of any country. Non-payments of tax will lead to penalties. The tax is one of the sources of revenue for the country to run the company. If anyone does not pay tax, he has to go through penalties. Legal action might be taken against the people who are not paying the tax after several numbers of notice and reminder. If one is not filling the tax or not paying the tax are often to face huge criminal penalties, which includes fines, imprisonment and civil penalties. If a timely tax is not paid then, the companies license will be cancel and it will be considered as illegally conducting the business. Australian Taxation Office is the governing body for taxation or statutory agency for collection of the revenue of the Australian government. Australian Taxation Office has legislation body as Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997 (Deegan 2012). Only for temporary residents or the foreign income is not assessed in Australia. So in order to get secured from the above liabilities on should always pay the tax on time and file return to get the company continued in a long term and in a secured way. The payment of tax creates a secure position for a person to continue in the business. b. As being a director of the company, Phil and Josephine should follow all the rules and regulation for running the company (Deegan 2012). The rule for continuing the company is to have at least minimum two directors to run the company. There are many task and responsibilities of the directors who are as follows: First of all, a director of the company must be principal strategist and planner. He should fully understand the necessary resources as well as the strategies to be implemented when and how. It should always start the business with plan and marketing activities to be involved in the near future. There has to be complete research, planning and writing for the development of the plan and forecasted to change when required. Second is the finance and accounting task. Almost all the business needs a start-up capital to get settled and grow the services and the products. It depends on the nature of the business whether it needs a small budget or a huge one. Some of the business needs a small amount of loan in order to get the fund for the expense of the "retail space, office equipment, and hiring employees". There is also the need for maintaining current bank accounts, processing of payments, trades which are receivable and payable and the taxes. Next is the Legal aspect. The owners of the company must comply with the federal and state business licensing laws. To create the legal contract, limited liability should be created to get accessed to the basic laws and get to know the legal problems which are going to arise due to the customers and employees. 3.a. If Sarah did not contribute anything or neither withdrawn from the business in the financial year the calculated profit for the beginning of the year is 21500 and Profit at the end of the year are 18000. Particulars Amt $ asset 56000 liability 38000 Profit 18000 b. After the withdrawn of 15000 as drawings, Sarah's Profit for the year is calculated below, which comes to 3000 Particulars Amt $ asset 56000 liability 38000 Drawings 15000 Profit 3000 c. Sarah contributed 15000 as capital and withdrawn as drawing 12000, then the calculated profit for the year is 4000 $ Particulars Amt $ asset 56000 liability 38000 Drawings 12000 Capital 2000 Profit 4000 4.a Here are the following transactions that will state the effect of the accounting equation for increase in asset as well as increase in liability: If the company receives cash from the bank as loan, it will lead to increase in asset in respect of current asset as cash and similarly it will increase the liability in respect of loan to pay off. If the company engages in the purchase of some significant quantities of the supplies on the credit (Deegan 2012). If the company is purchasing the land by paying the 50% of the cash and which signifies a note payables for the other 50% of the amount. 2. Here are the following transactions that will state the effect of the accounting equation for Decrease in one asset and increase in another asset: If the company purchases any machinery or equipment or vehicle or any of the fixed asset with the company cash, then it will lead to increase in the fixed asset and decrease in the cash of the company (Deegan 2012). With the purchase of land by paying 50% in cash and signing a note payable for the other 50%, this transaction will have the effect of increase in fixed asset and decrease in cash account. 3. Here are the following transactions that will state the effect of the accounting equation for decrease in asset as well as decrease in equity: If drawing is occurring from the business by the owner for his personal use, then there is decrease in cash and with the effect of drawing there will be decrease in owners or stockholders equity which will be effected in retained earnings and Dividends. If the company sells its inventory, then it will decrease the inventory account and which will be created as cost of goods sold expenses which will get affected by the decrease in the equity account (Deegan 2012). If there is payment of the rent, it will lead to decrease in cash as asset and decrease in the income as equity. 4. Here are the following transactions that will state the effect of the accounting equation for increase in asset as well as increase in equity: If there is involvement of the personal cash of the owner in the business, then it will increase the company's cash account (current asset) and increase in the capital account, and if it is corporation, then it will lead to increase in the common stock accounts. If there is contribution of the personal truck by the owner to the business then it will increase the fixed asset account and it will similarly increase in the proprietors capital account, and if it is corporation, then it will lead to increase in the common stock accounts (Deegan 2012). If there is any amount which has been debited in the trade receivable and then with the similar amount crediting to the revenue account, it will lead to increase in the current asset and it will lead to increase in the revenue account as to owner's equity. In case of sole proprietorship, there will be increase in the capital account. In the event of a corporation, there will be increase in the retained earnings account (Deegan 2012). If there is stock selling occurring, then it will lead to increase in cash account and increase in Equity If there is sale of the inventory, it will create a sale and offset receivable. This will increase the assets account as trade receivable account band also increase in the income/Equity account. 5. Here are the following transactions that will state the effect of the accounting equation for Decrease in liability as well as decrease in asset: If the company repays the loan amount of the bank then it will decrease the current account as cash and will also decrease the companys liabilities as loan payable and notes payable. The transaction which has occurred in paying the business expenses will lead decrease in capital as liability and decrease in the asset as cash paid. If there is remittance of the payment is to be to any client, i.e., repayment of the creditor, it will lead to decrease in the cash account as well as the decrease in the liabilities as trade payables (Deegan 2012) Reference List Navi, S.T., 2012. Corporate social responsibility. Deegan, C., 2012.Australian financial accounting. McGraw-Hill Education Australia.