Corporate Financial Accounting Assignment Help
Week 1: Listing on Stock Exchange Advantages
- Access to Investors
The opportunity to tap public markets for funds for companies with large current and future investments and high growth cannot be ignored (Wood, 2007). The company might need funds for expanding its operations in future. Hence, by listing on stock exchange, the company can raise funds at lower cost without having much difficulty as all kinds of investors seek stock exchange for investments (Wood, 2007). This is the main advantage as listing can enlarge the number of investors to whom the shares can be sold (Wood, 2007).
- Publicity
A good company can attract attention by listing on the stock exchange. It gives a free publicity due to daily quotations (Wood, 2007). It also raises the marketability of the company by making its value higher (Wood, 2007).
- Liquidity
Shares of a private company can be traded on the National Stock Exchange (NSE) with minimal costs (Wood, 2007). It is equity funds raising source hence it reflects that the company is preferring staying less leveraged. Raising money from diverse investors can reduce the liquidity while making the companies less leveraged (Wood, 2007).
- Underwriting Costs
Underwriting costs arising to listed companies is often less for their initial public offerings (IPOs) as compared to the companies that are not listed on the stock exchange (Wood, 2007).
- Objective Assessment
NSE quotes the current prices of the bonds based on the prices at which the securities change hands so that investors can benefit from the objective assessment of the current stock price (Wood, 2007). It also provides a much higher collateral value for bank credits in future.
- Other Benefits
Other benefits include;
- Provision of tax relief
- Image enhancement of company
- Full disclosure of information
- Efficient allocation of capital
- Enabling capital flow to priority areas
- Provide proper control and supervision of trading of securities
- Impart liquidity to securities
Source: (Siddaiah, 2010)
Week 2: Journal Entries ABC Ltd.
A)
Interim Dividend (assuming dividend was declared on 31st March 20X1) (Figures in $)
31/3/20X1 Retained earnings a/c -DR 100,000
To Dividend Payable a/c -CR 100,000
7/4/20X1 Dividend Payable a/c -DR 100,000
To Cash a/c -CR 100,000
B)
Date Particulars Dr. ($) Cr. ($) 31/3/20X1 Dividend Payable a/c 100,000
30/6/20X1 Profit and Loss a/c 500,000
14/9/20X1 Cash/bank a/c 250,000
Week 3: Journal Entries Adelaide Briton
a)
30/6/20X1 Bank a/c -DR 6,000,000
To Debenture application a/c -CR 6,000,000
30/6/20X1 Debenture application a/c -DR 6,000,000
To Debenture liability a/c -CR 6,000,000
- b)
30/6/20X2 Finance cost a/c -DR 720,000
To Bank a/c -CR 720,000
30/6/20X3 Finance cost a/c -DR 720,000
To Bank a/c -CR 720,000
30/6/20X4 Finance cost a/c -DR 720,000
To Bank a/c -CR 720,000
30/6/20X4 Debenture Liability a/c -DR 6,000,000
To Bank a/c -CR 6,000,000
- c) Debenture Liability a/c ledger
Date Particulars Dr. ($) Cr. ($) 30/6/20X1 Debenture application a/c 6,000,000
30/6/20X4 Bank 6,000,000
Week 4: Importance of Related Notes
Financial statement notes are the additional important information apart from the basic 3 financial statements. These notes to financial statements give due clarity to the users in right interpretation of the financial statements. (Riahi-Belkaoui, 2003).
Importance / Benefits of Financial Statement Notes
To avoid such clutter, notes to financial statements are separated from financial statements. It facilitates ease to a different level of users (Riahi-Belkaoui, 2003). Overall, with financial statement notes, the annual report of a company is organized for efficient and appropriate use (Riahi-Belkaoui, 2003).
Ease of Accessibility
Easy access saves the time of a user (Riahi-Belkaoui, 2003). Users have the most important things highlighted in the financial statements. They may or may not refer or may selectively refer to notes as per his requirements (Riahi-Belkaoui, 2003).
Helps Auditors
Financial auditors are required to furnish their opinion on the financial statements (Riahi-Belkaoui, 2003). These notes help auditors in forming their opinion about the financial statements (Riahi-Belkaoui, 2003).
Helps Financial Analysts
A financial analyst refers to financial statements notes for analysis and gaining information on future events. This helps the analysts during projects for carrying the valuation of a company (Riahi-Belkaoui, 2003).
Helps Shareholders
These notes help shareholders understand the real performance of the company in last year as well as project the growth in the coming years (Riahi-Belkaoui, 2003).
Provides Other Information
Other material information like law suits, significant threats to company’s revenues and standards details are presented in notes to financial statement (Riahi-Belkaoui, 2003). This can help analysts in observing the standards that were used while preparing the financial statements (Riahi-Belkaoui, 2003).
