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ACCT11059Assessment 1

Lecturer: Maria Tyler

Due Date: 13th November 2017

Prepared By: Brooke Dunn

Student Number: S0271604

Brooke Dunn S0271604

Step #1

Introduction: Accounting, Learning & Online Communication:

Since the first page of the introduction is introducing the lecturers and the unit in general, I

guess I better introduce myself. My name is Brooke Dunn and I am a second year Bachelor

of Accounting/ Bachelor of Business student. I am based in Bundaberg but live about 30km

outside of town. I work as a receptionist/ junior administrator at a local building designer.

This involves answering phones, liaising with clients, consultants and government, basic

data entry, invoicing and much more. I am very excited about this unit because I know, in my

own work and with technology becoming a prominent part of everyday life, good online

communication is crucial.

I.1 Learning Tasks

What is accounting?

Personally, I believe that to have a good understanding of business or accounting you need

to at least have a basic understanding of the other. Even believing this, I am still surprised by

the large amount of CEO’s in Australia with accounting backgrounds. I assume that it is their

knowledge of accounting that helps their success. Another thing I enjoyed was the mention

of accounting being more than just ‘sitting in a darkened room counting beans’. This is often

a comment that is made by people when I tell them I am studying accounting, so it is good to

be reminded that it’s more than just numbers.

Our own listed company

The listed company assigned to me is ‘Spirent Communications’, which is a UK company

that specialises in telecommunication equipment. This is not a company I have heard of

before so the thought of doing the assignment on it is a little daunting. I assume that one of

the things to take away from this assignment is that no matter what country an accountant

works in, their role in business is the same/ similar. The assessment tasks being spread

throughout the course does not seem like a big trade-off to me. I usually find that when I’ve

done assignments in other courses that I spend too much time focusing on one area or

subject and neglect others. The assessments having several due dates will help me manage

time better.

Major assignment: ASS#1 and ASS#2

This is the second time I’ve had to do an assignment similar to this so I feel a lot more at

ease about it. The first time I did a similar assignment it was very daunting. It also involved

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getting feedback from peers, which added to the pressure. Having looked through the unit

and assignments, I feel very reassured that it will not be too difficult if weekly tasks are

completed. I like this type of assessment task because it really tests how much information is

actually being absorbed and points out gaps in your learning. Towards the end of the term, I

usually find myself slacking off a bit or neglecting to do the weekly tasks because I’m too

busy focusing on assignments. I feel that the way the assessment tasks are structured will

be a great help as they break the assessment tasks down for us so it doesn’t seem so

overwhelming. Perhaps is it a technique that can be carried across to other subjects.

Reading the Study Guide

I love Peerwise (not to the point of obsession though). It is a great resource to use. I find that

as I am reading the study guide, I’m thinking about what questions to write. To write a good

quality question, you need to have a good understanding of the chapter so I find myself

going back and rereading areas to make sure I’ve grasped the concept.

Interaction with others

I am majoring in marketing and know the crucial role of social media in marketing products

and building networks. Being encouraged to interact with others and having a number of

platforms to do so, will help prepare us for ‘the real world’. I like schedules and timetables so

I’ve been able to set up my week, allowing for at least 12 hours for this subject. Being a

distance student, I feel like I need to be ‘more on the ball’ with time management because

there is no set time to attend lectures.

Start Early

Starting early is not my strength. I study all year round so I make the most of the two weeks

break in between terms. Guiltily, I did not really look at this unit until week 1. I had skimmed

through the assessment tasks and the Moodle page but that’s it. The sentence about

completing the readings before attending the lectures (or watching them) makes sense to

me and is something that I have made a habit of doing. The blogs are new for me so I’m a

little bit nervous about doing one however the resources made available have eased my

nerves a little. Again, I love this aspect of the unit as it helps us develop networking skills,

which will be one of our biggest advantages.

People who do not do well

Having not done anything on this unit for the two weeks prior to the term starting I already

feel a little behind. I will definitely need to put in a few extra hours this week to catch up and

put my mind at ease. The course structure will ‘be my best friend’ because I feel like having

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little sections due each week will help me keep on top of things and stick to the schedule I

have set myself.

I.2 Interact or perish

Learning by doing is the best way for me to take in information and get a better

understanding of things, so I’m very excited about this. Interacting with others is something

that I know I will have to put extra effort towards. In past subject, I have been content to sit

back, do my own learning, and occasionally read other people’s comments on Moodle. I

know in this subject, that approach won’t cut it. Having so many different platforms to interact

with others will be a huge advantage especially since we won’t have to worry about copying.

Tip#1 Read the Study Guide

Compared to some of the chapters I've had to read in the past, the study guide chapters are

not that long. I agree with Martin about reading the chapter in sections and taking a break in

between. This is a technique I have to use, as I find myself starting to skim through sections

or lose focus. I like to read and can read relatively fast so I only need to set aside 20-30

minutes in the morning and again in the afternoon and night. This allows me to get the whole

chapter completed in a day which means, the next day I can do PeerWise and watch the

lecture while the content is still fresh in my mind.

Tip#2: Complete your KCQ

As I read this part I find that I am already doing these things. Personally, taking notes helps

cement things in my brain a little bit more and highlighting sections that I don’t understand

allows me to come back later and try again.

Tip #3: Log on to PeerWise regularly

As previously mentioned, I love PeerWise. I think it is a great learning platform that not only

allows you to test your knowledge by answering a range of questions but also gives you the

opportunity to interact with others in your unit. Rankings and scores also keep it a little bit

competitive and interesting. The ability to follow authors is also very handy as you can

quickly find the type of questions you like answering. After answering some questions on

chapter 1, I found myself following a few people who had posted medium/ hard questions.

This is because I feel that these types of questions are the ones that really test your

knowledge and make it a bit more challenging.

Tip #4: Start a free blog on WordPress

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While I have not set up my blog yet, I have looked at the links and made a few notes. The

provided links are very helpful and the task does not seem so scary now.

Tip #5: Join our unit Facebook page

I've requested to join the page. Again, this is a great idea as it allows for lots of interaction. I

know myself, that I am on Facebook at least 1-hour day so it will be a good way to keep

updated on the subject.

Tip #6: Follow your Unit Coordinator’

I have made a note to go and follow both Martin and Maria.

Tip #7: Check out last year’s exemplars

I have been told in the past that exemplars are not good ways to learn. Personally, I like

exemplars. They are that added insurance that “yes, what I am doing is correct”. The

exemplars provided in this unit are really good and I feel more confident going into the

assessments.

I.3 How we learn

Being a second-year student, I have found that having a deep understanding of the unit,

rather than just ‘rote learning' makes life a lot easier.

Reflect on how we learn

I am always amazed at how much information I actually retain from the readings. Usually,

especially in exams, I am able to recall little bits of information that I had no idea had sunk in.

I do zone out a lot when I’m reading the chapters so I often have to have a break and reread

sections.

Reason for the seasons

I understand the Harvard example perfectly. In fact, it often feels like my brain does a reset

at the end of every term, wiping clean majority of the information learned. Well, was it really

learned if it was wiped away so easily? In other cases, it will take a quick revision before all

the information comes flooding back and I can tell you at least a few facts on the topic. The

six different ways we think of learning was also very interesting. The points included some

things that I would never have thought of but when I thought about it more it made a lot of

sense.

1 Learning is a quantitative increase in knowledge

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Learning many things as quickly as possible is how I think many people would define

learning, especially students around exam time. I also agree with the fact that learning is

more than just knowing lots of facts.

2 Learning is memorising and reproducing

I agree with this statement. Is something really learned if you can't recall and use it later?

3 Learning is the acquisition of facts and methods which can be retained and/or used in

practice

When I first read this paragraph I immediately thought of learning Shakespeare in high

school. At first, I thought, how was learning Shakespeare helpful information to retain and

how would it be applied in practice. After deeper consideration, I was able to link it back to

this assessment. We are to take reports from a company that we are not familiar with and

decipher them into something that makes sense. Similar to taking the old language in

Shakespeare and converting it into something we could understand.

4 Learning is the abstraction of meaning

I completely agree with this section. How can we fully understand or learn something if we

cannot describe it in our own words?

5 Learning as an interpretative process aimed at understanding reality (i.e. the real world

around us)

To me, this is about knowledge changing personal perspectives. Similar to changing your

opinion throughout a court case. You might think that the outcome is obvious until you learn

facts and hear evidence. By the time a verdict is given you might have completely changed

your mind about the case. Have I interpreted this correctly?

6 Learning is changing as a person

I think this point links back up to the previous one. As our understanding of reality is clearer it

has the ability to change who we are and the way we see and interpret things.

I liked reading about learning and never thought the way we looked at learning could

influence how we learned. It is definitely something I will keep in mind.

I.4 Communicating effectively online

This section was really appealing to me. In my work, about 85% of communication is done

online so I understand how important it is to be a good communicator.

Changing world

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A large portion of this section has been discussed in other units I’ve completed e.g. Intro to

management and Organisational Behaviour. One of the biggest things I think I will leave

university with, other than knowledge, is good communication skills. I am an introvert by

nature so while my online communication may need to be worked on, my face-to-face

communication really needs to be worked on. Already, after two years, I can see the

difference that university has made in the way I communicate.

The advantages of online communication have certainly made studying easier. I used a

laptop in high school, TAFE and now at university so I am a fast typist, so for me that also

comes as an advantage. Information overload is probably one of the main disadvantages

I’ve often face with online communication. I enjoy reading but often if I have to read a large

portion of information on a screen I find it more difficult. I much prefer the ‘old fashioned’

hardcopy books for reading. I am really looking forward to improving my online

communication skills.

Accounting software

I have experience with both MYOB and Xero. MYOB seems to be used the most. I have

used it at school, TAFE, university and at work. A year ago, at work, we changed from

MYOB to Xero. I got to sit with the bookkeeper and see how the accounts were closed in

MYOB and transferred over to Xero. I personally prefer Xero. I had not heard of any of the

programs for larger businesses, but I guess I haven’t really had much to do with large

businesses.

The anywhere, anytime aspect of the accounting software has been a crucial element at

work. Our bookkeeper is external so it is easier for us to upload the information she needs

rather than her coming into the office every week. Xero is also compatible with the program

we use to organise our jobs and timesheets.

Smartphones

My smartphone, like many people today, is an essential for my day-to-day activities. I use it

for pretty much everything except university stuff. Xero also allows you to take photos of

receipts and email it to the program, so smartphones are also used for that purpose as well.

Blogs and discussion forums

As I previously mentioned, the blog seems a little daunting as it is something that I have

never done before. While I was taking a break from this assignment I had a look at the

resources/ links provided and feel a lot more at ease with setting up my own blog. It is on my

to-do list to do as soon as possible.

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PeerWise

I am very excited about using PeerWise. The links have been very helpful in getting the hang of how to use it but I think I’ve got it now.

Conclusion

The conclusion provided a great overview of the topics discussed in the introduction.

Chapter 1: A Way of Viewing Business

After reading the brief introductory paragraphs I think I am going to enjoy reading this chapter. I like to know why things happen and why things get done a certain way.

1.1 It is all about reality

To me, I agree that accounting is using figures to tell what is happening in a business, but what is mean by “Or is it?”. Is accounting even more elaborate and in-depth than this?

I like the paragraph about business changing the world. It is not the first thing that comes to mind where changing the world is concerned. When you think about it, business does play a very big part in shaping the world and economy we know.

Through other units, I have previously learned about the different types of interacts a firm can have with other, in fact, it is an overlapping idea in many units. Destroying value is something I have never really thought about. Is the goal always to create value and never destroy it or are there some exceptions?

As mentioned above in the introduction section, I can’t believe how many listed company directors have accounting backgrounds. It’s natural for business and accounting to go together but it still seems like a large amount. I wonder how much they are benefitting from their accounting knowledge. I personally think it would be invaluable and it is partly why I am completing a dual degree.

One thing that I most enjoy about business it that all businesses are different, meaning that their accounts and accounting procedures are also different to some degree. This also reinforces the paragraph in the introduction about learning. If you don't fully learn and understand then it will be extremely difficult to apply accounting and business practices to a completely different business to those that have been studied.

Businesses are everywhere

To be totally honest I skimmed over the first two paragraphs of this section pretty quickly. The only point of them seemed to be to emphasise the point made previously about the large variety of businesses that exist. I also spent little time looking at Figure 1.1 as it was of little interest to me, even though I have only been to Yeppoon once.

The next two paragraphs just emphasised the fact that there are a lot of different businesses. One question that can to mind was how different are the accounts of a small firm compared to a large company such as Coles? Some of the accounts/ transactions must be the same, even if the quantity is different?

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Types of Businesses

The different types of businesses are also another overlapping concept that has been discussed in previous units. The first three paragraphs under this section, for me, are just revision, especially since I just completed a unit that discussed all types of business in much detail. One thing I would be interested to know is why such a large percentage of businesses in Australia are sole traders? Is this because they are so easy to set up and because they can reach many individuals through the internet?

Partnerships would probably be my preference if I were to go into business. Although it is a little more expensive and regulated than sole traders, you can rely on not only financial help from the other party but also their knowledge. Knowledge is something that is neglected from mention in these paragraphs but I believe, in most cases, knowledge is equally, if not more, beneficial to have then money. I think that every partnership should have a partnership agreement because I've witnessed even the best relationships quickly turn around. Although the agreement is not a foolproof method to prevent court proceedings it would most likely make the whole process more streamline and easier to make a judgment. I had to read the sentences about Coles a few times because I couldn’t believe the numbers. I know Coles is a massive company with stores all over Australia but until it is written on paper it is easy to forget the sheer size of it.

I do not know a lot about trusts and would be interested to know more. How common is this type of business? Can you determine from a company’s books as to whether there is a trust somewhere in the business structure?

I think that the question of whether accounting can make it easier or more difficult to understand the business realities of the firm does not have a straightforward answer. At this point in my course, I believe that if you understand how accounting works and can tell why things happen from financial statements then accounting makes it easier, however, without this knowledge, it makes it more difficult. That is why we have accountants, to explain to those without accounting knowledge what is happening to the business financially to allow them to make better decisions.

Using a spreadsheet in this assessment does not worry me. I have a lot of experience with spreadsheets and find that they are used a lot in the business world. I am interested to see how formulas can be used to show how all the reports are connected.

1.2 Keeping records

This seems to be a course targeted at first years so I am finding that as I read this, majority of the information is just revision, including the people who have an interest in a business’s accounts.

Luca Pacioli

I am both amazed and surprised that most elements in accounting today have been developed from practices in the late 1400’s. Has accounting really been around that long?

We build on the past

All I thought when I first started reading this section was ‘imagine handwriting 3000-word assignments' and ‘imagine the typist trying to quickly type messy handwriting'.

The next few paragraphs didn't really have anything to do with accounting, however, I found them fascinating. It also answers the question that I had when I first learned to type ‘why aren't the keys in alphabetical order?' Even though it appears to have nothing to do with

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accounting, I understand that the point being expressed is how influential things in the past can be in the future. It also emphasises that because something worked well in the past, it does not mean that it should not be changed or adapted to suit modern ideas.

Bookkeeping without books

With so many software packages, how do you know which one is best suited to your business? As mentioned previously, out of the list of software, I am comfortable using MYOB, Xero, and Excel.

The digital decade is very evident. The other day we had a blackout for about 16hours and in that time, it was evident how much we relied on technology – not just for entertainment but for other daily activities as well.

As most software packages automatically do double-entry, I understand why we are taught to do some bookkeeping by hand. It is automatic, so sometimes it is easy to forget that double-entry is even a thing until we have to manually record a transaction on paper.

1.3 Two sides to everything

Confidence in learning

Learning for understanding is sometimes neglected by myself in some subjects. I find that I try and get the bare minimum out of a subject to pass and quickly reset my mind once the exam is over. I am excited to learn how to learn things with a deeper understanding to that I can actually recall information later.

Journals and ledgers

Having been studying accounting for two years, I am very comfortable with journals and ledgers. Again, with the presence of technology, I wonder how often accountants think about the transaction they just recorded in a journal being recorded again, automatically, in a ledger. I think, unless I was doing it on paper, I would not give much thought to this process.

It seems like trial balances are a very important tool for identifying errors in records. Even with the help of technology, human error cannot be eliminated.

How long would it have taken in the past to manually transfer transactions from the journals to the ledgers, to the trial balance? And how long would it take to identify and correct an error?

Proprietorship

This is the first time I’ve heard of the entity concept. My understanding of the entity concept is that the daily transactions of the owner are kept separate to the daily transactions of the business. Is this correct?

Okay, let's see if I interpreted this correctly. Basically, every transaction affects both the business and the owner. So, when an item is sold, the business loses inventory and GST but the owner gains revenue? Or is that way off the mark? Will definitely need to make a note to confirm this.

At the beginning of the year, I took Management Accounting. In this course, I remember watching a video that a teacher over in America had made with his class explaining debits and credits. The explanation was delivered in a song and I don’t think I’ll ever forget ‘Debits

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on the left, credits on the right’. Computers marking debits as positives and credits as negative to show a distinction is something I’ve noticed, but never really understood that it was because computers were incapable of distinguishing between left and right.

Okay, so now that I've read further down the page I realise my earlier example was off the mark. Let me try again. So, because equity equals assets plus liability, any transactions that the firm makes effecting assets and liabilities will also impact the owner’s equity. So, when the firm’s accounts payable increases, the owner’s equity decreases.

Accounting equation

The accounting equation is also something that I have frequently come across in other units. In fact, it was one of the first things I learned in high school accounting.

The misconception about double-entry was interesting to read about. Most people probably won’t realise that double-entry is a way of looking at business. It shows that when the business obtains an asset, the owners are earnt equity because of how they control and invest assets for future economic gain.

1.4 Five elements of accounting

The first thing I learned in year 11 accounting was the five elements of accounting. Obviously, because they are key elements, this section has been discussed deeply in many units already completed. This seems to link back to section 1.1 about creating and destroying value. Anything that increases equity adds value and when equity is decreased, value is destroyed.

I liked reading about equity having its own conceptual ‘reality’. It makes sense to me. Assets and liabilities create the firm’s conceptual reality and due to double-entry, equity creates a separate reality for the owners. I think that’s right.

Measure of value

As businesses transactions involve exchanging monetary values for goods and services, it is easy to get a clear idea of the dollar value of a business. This is good as the value of similar businesses can be compared to see how the firm is performing against those in the industry.

Changes in value

The main thing I take from this paragraph is that you might be able to see the value of a business at a particular time, but that information quickly becomes outdated because business constantly changes.

Revenue and expenses

Are there particular reasons why a firm would close its expenses and revenue accounts other than at the end of the financial year? Maybe when they are selling their business? Or preparing reports to present to shareholders?

Revenue increasing equity makes sense because it is increasing value to the business, just like expenses decrease it. Well, not exactly increasing value in the sense that it creates its own value but merely transfers it to increase equity.

Extended accounting equation

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The way I understand this is that the accounting equation (equity = assets – Liabilities) is used to calculate the owner and businesses value once the temporary accounts have been closed. The extended equation, on the other hand, is used to calculate value when the temporary accounts are still open. Am I understanding this correctly?

Conclusion

Some of the main points I have gotten out of reading this text are:

- There are many types of businesses- Accounting is about showing what is happening in a business - Value is created and destroyed by assets and liabilities- Value is transferred to Revenue and expenses- Double-entry is used to show that with every business transaction, there is an equal

effect on the owner’s equity.

Step #2

Here is the link to my blog: https://brookedunn.wordpress.com/

It has also been posted in the Blog Links Forum.

Step #3

My company is Spirent Communications. Spirent Communications is a communications and

network testing company based in the UK. I have saved the past 3 annual reports (2016,

2015, and 2014).

Key concepts/ notes from 2016 Annual report:

My first thought when opening this report was ‘Wow, I am not going to read all this’, as it is

164 pages long. Is this typical for annual reports or are some significantly shorter?

The second page includes their goal, vision, and key strategic actions. I really like this as

these things are the basis of a business and gives you a quick idea as to what is really

important to them. After this page, I quickly scrolled down the report to see if any headings

stood out. The main thing that surprised me the most is that there are lots of images and

diagrams, which I also enjoy. I usually find that if I’m reading a report or journal article I zone

out pretty quick if there is nothing to keep my attention.

Overall the report was easy enough to understand. The only thing I really found difficult was

the technical terms associated with telecommunications, as I don’t have much experience in

this area. Not sure about everyone else’s reports, but mine seemed to highlight all the key

figures that would be of interest to investors and stakeholders. I think that this is a really

good idea as it saves busy people from reading the whole report to get the information they

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https://brookedunn.wordpress.com/


really need. One thing I wish they did, however, link the contents page to the applicable

sections so that you can just click the heading of what you are looking for. This would make

it easier for whoever was reading it to find the information relevant to them quickly, rather

than scrolling through pages of information.

From a glance at the ‘results and highlights’ it appears the Spirent Communications did not

perform as well in 2016 as it did in 2015, although not by much. Looking closer at the reports

and comparing them to the previous years has confirmed this. Spirent has been slowly going

downhill for at least the past 4 years. I wonder why this is? Another thing that surprised me

with the reports is the fact the financial statements seem to be more towards the middle of

the report rather than the front, which is where I thought they would be. Is there a particular

reason that reports are done this way? Or is it just this report?

Overall, this report was set out pretty well and was easy to make sense of. I feel a lot better

about my company now after reading through some of the report, and can actually get a bit

excited about it.

My top 3 Blogs:

1. https://rebekahsleep.wordpress.com/ - Rebekah Sleep

My favourite thing about Rebekah’s blog is all the images she includes. They really

help to break up the writing and keeps your attention. She has also made an effort to

post beyond what is required for this assessment. Everything flows very well and I

particularly like how she has a list of things down the right-hand side rather than

leaving it blank or only having a few.

2. https://isabellaplautzaccounting.wordpress.com/ - Isabella Plautz

I love the look of this blog. The monochrome layout proves that you don’t need a lot

of colour to make an impression. The set out is also excellent and it does not appear

“busy”, so you can really focus on her writing. She writes very well and it is easy to

understand.

3. https://accountmein2017.wordpress.com/ - Lillian McCracken

Again, similar to the other blogs mentioned above, her blog is set out very well and it

is easy to follow. She also addresses the reader a lot which makes it feel like a one

sided, face-to-face conversation, which keep you interested.

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https://accountmein2017.wordpress.com/

https://isabellaplautzaccounting.wordpress.com/

https://rebekahsleep.wordpress.com/


Step #4

Please refer to excel spreadsheet.

Step #5

Chapter 2: Understanding the game

I’m kind of excited to read this chapter as I imagine it will be about all the different

accounting guidelines. I enjoy how these chapters have been structured to include

some historical facts to add an interesting element to the text.

It makes sense that managers can request whatever financial information they want,

however it should be within reason i.e. to help them make better decisions.

Rules of the game

I am still amazed at how long businesses have been preparing financial reports. I

wonder how much more detailed they have become over the past 50 or so years? It

makes sense that the banks were the catalysts for the change to separate financial

reports. Banks control the money and therefor have a lot of power so it is not wonder

that the businesses complied and provided the necessary reports. Apart from

knowing is they are going to lose their jobs, how important are financial statements

to employees? Or the customers for that matter?

Growing regulation

I feel like the first two paragraphs of this section is just repeating what has just been

mentioned in the previous section just with more details. Managers reports are not

regulated the same as external reports, but how much say to managers get in how

reports are presented? Do they simply accept a report the way that the accountant

has prepared it, or do they make requests to have it set out a particular way?

Where the rules come from

One thing I’ve always wondered was, how difficult is it to learn accounting in one

country and then move to another and practice it? If the rules for producing general-

purpose reports are similar then what else is similar?

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GAAP

Complying with all the rules is what I think the most challenging part of being an

accountant would be, especially because there are not rules for everything.

Accounting standards

Why do so many countries adopt the IFRS? Is it because there are so many

multinational company’s? While it is daunting thinking about all the rules and

regulations that have to be learnt it is comforting to know that there are

organisations, like the CPA, to help with the grey areas or to explain things.

Whether to report or not

The fact that not every organisation needs to comply with GAAP makes sense. It

seems like it would be a lot of work just doing it for one company, let alone 1.8

million Australian companies. Last term, I studied company law so I am very familiar

with several sections of the Corporations Act. So, it sounds to me like the main

purpose for general-purpose reports for a business perspective is to review the

figures and make decisions. Would this be used when preparing a budget?

You can’t have a rule for everything

I feel like page 5 is just explaining the purpose of an assessment task like this.

Writing down our thoughts and feelings to show our deeper understanding of what

we are reading while at the same time, pointing out any flaws in our knowledge.

It seems like even with all these rules there is still a lot of ambiguity as to what is

acceptable reporting.

Accounting concepts

How do people learn accounting standards if they are constantly changing (e.g.

being altered, added to, deleted)? Do accountants get notified when a standard

changes or do they have to keep checking the standards?

It surprises me that managers have the primary responsibility for preparing and

presenting financial reports. This is probably why so many managers have some

form of accounting degree…oh wait that’s what the next sentence says (never mind).

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This makes sense, imagine being held accountable for something that you don’t

understand…now that is a scary thought.

3.2 Accrual Accounting

Accrual accounting is a term that I have often heard during my learning and one that

I think I understand well. I work for a building design firm and when we invoice it is

after the plans are already complete. So the clients paying for something after the

work has already been done for them. Similar to the electricity example only from the

electricity company’s perspective. There still seems to be a lot of room for personal

judgements and interpretations despite all the rules associated with accounting. I

guess if someone disagreed with you, you would just have to be able to justify why

you did something a particular way.

Other general ideas

It was interesting reading about Ansett Australia. Could they have done anything

differently to achieve a better outcome? Do business make allowances for

unforeseen circumstances?

The judgements about what information to disclose in financial statements makes

sense. There is so much data and information that could be put into reports that it

could be overwhelming to the reader. The person preparing the reports would just

have to ensure that the information presented accurately portrayed the current state

of the entity.

2.4 Quality of information

Two key qualities

Relevance and faithful representation make sense as the two main qualities needed

in financial reports. This is like showing the information needed to make a good

business decision but not hiding the ‘bad’ information to influence a certain outcome.

These seems like common sense and anyone who is an accountant should know

this, and even people who are not could probably guess.

Other qualities

Again, these other qualities are just common sense, and if an accountant is good at

their job, they will do these things without even thinking about it. In fact, these

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qualities can be used for nearly any situation where information is traded with

another person, not just accounting.

Conclusion

I feel like there was a lot of repetition in this chapter, and certainly got the key points

that were made. Even with all the rules there is so much ambiguity but it is good to

know that there are places that professionals can turn to for help if they are unsure

of anything.

3.1 A view of business at rest

This is the perfect introduction to financial statements. It makes the whole process of

reading my own company’s financial report less daunting. I also like how it is

referred to as a marketing document, this is not something that I think a lot of people

would associate with annual reports.

Balance sheet

Having studied accounting at multiple education levels, I am very familiar with

balance sheets. Most of this information is not new to me but it is definitely good to

have a refresher. I have little experience with footnotes, so would like to learn a bit

more about this in the future.

Not just one company

The parent company was a little confusing as it is a term that I have only heard a few

times. Once I read over it a few times, I think I understand it a little better but is

something that I may need to do further research on.

3.2 Business on the move

Business is constantly moving, that’s common sense. The idea that the balance

sheet does not show the steps involved in moving the business forward also makes

sense, after all it only shows the assets, liabilities and equity on one particular day.

Income Statement

Again, this information about income statements is nothing new as it is an area that

has been frequently discussed in other accounting subjects.

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Statement of changes in equity

Unlike the balance sheet and income statement, I have not done a lot of work on the

statement of changes in equity. To me, it seems as this would be one of the easier

financial statements to prepare.

Cash flow statement

I remember on several occasions having to complete a cash flow statement

manually. It was relatively easy just very time consuming. Luckily accounting

programs are equipped to just spit these reports out otherwise most accountants

would be spending their time completing this statement. The temporary accounts

being revenue and liability is understandable and is a concept that I have previously

come across.

Overall I enjoyed reading these sections, although having completed numerous

accounting subject before, these were more of a refresher rather than to provide

information.

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