Accounting: Generally Accepted Accounting Principles and David Jones Essay

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Question Details
Findings
Source
Director’s Report
The amount of the recommended final dividend.
On 24 September 2009, the Directors declared a final dividend of 17 cents per ordinary share, fully franked at the tax rate of 30%. The final dividend is payable on 2 November 2009.
The 2009 annual report of David Jones, pg 34, 36

Balance Sheet
Total amounts for:
-Current assets, which type of current assets has the greatest value?

-Non- current assets, which type of non-current asset has the greatest value?

-Total assets 2009 and 2008.

-What are the main factors causing the difference on those total assets.

Total amounts for:
-Current liabilities

-Non-current liabilities

-Retained earnings

-The significant changes in the company’s financial position from 2008.

The consolidated figure for the total amount of current assets for the year ended 25 July 2009 was $ 293,979,000. The type of current asset which had the greatest value was inventory of $ 244,843,000.

The consolidated figure for the total amount of non-current assets for the year ended 25 July 2009 was $ 833,238, 000. The type of non-current asset which had the greatest value was property, plant and equipment.

The consolidated figure for the total assets for 2008 was $ 1,529,645, 000 and for 2009 was $ 1,127,217,000.

The difference in the total assets in 2008 and 2009 exists because for David Jones Limited, even though the total current assets in 2009 were less than the total current assets in 2008, the total non-current assets in 2009 were significantly higher than the figure in 2008, mainly because the property, plant and equipment, intangible assets and deferred tax assets in 2009 were much greater than in 2008. The significantly higher valued non-current assets in 2009 caused the total asset value in 2009 to be greater than the 2008 value.

The consolidated figure for the total amount of current liabilities for the year ended 25 July 2009 was $ 304,234,000.

The consolidated figure for the total amount of non-current liabilities was $ 135,598,000.

The consolidated figure for the retained earnings for 2009 was $ 152,520,000.

The consolidated figure shows that the financial position of the company was stronger in 2009 compared to 2008 as the value of the net assets in 2009 was $687,385 000 and in 2008 it was $619,790 000. Even though the value of total assets in 2009 was much lower than the value in 2008, the total value of liabilities in 2009 was significantly much lower than the value in 2008, hence greater total equity in 2009.

The 2009 annual report of David Jones, pg 59

Cash Flow statements
-How much cash did the company generate from their main operation during the year 2009?

- Why is the company’s net cash flow differing from its net profit?

The net cash flows generated from operating activities in 2009 was $ 191,527 000.

The net cash flow is different from the net profit because the net cash flow is derived from the cash flow statement which is based on cash accounting. The net profit is derived from the income statement which is based on the accrual system of accounting.
The income statement for 2009 shows that David Jones had $ 1,985,490 000 revenue from goods. However, the receipts from customers in the cash flow statement are stated to be $ 2,207,818 000. This indicates that some of these receipts from customers do not belong to the 2009 financial year and must be credit sales from the previous financial period being received in this financial year.

This overstates the cash figure for this financial year. The net cash flow and the net profit are different for this reason because the income statement includes revenue earned and expenses incurred during the current accounting period while the statement of cash flow includes cash received from any source and cash paid to any source. These payments and receipts do not necessarily relate to
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