Making some great head way with Peerwise. I have also been researching and compiling a draft for step 3, hopefully I should have something posted by the weekend!

Step 2

Study Guide Chapter 1.4 & cHAPTER 2

 Sharon Field - Q89038205 | ACCT110811 - Introductory to Financial

 Personal Reflections

Even as I read though these sections, I struggle to search the part of my brain where the previous accounting knowledge is safely packed away. These concepts are familiar yet strange. It’s clear at some point I just memorized ‘some stuff’ then without fully comprehending its meaning, promptly forgot. Much like a caterpillar munching its way through life, I will transform with this learning, into something meaningful and beautiful. I can apply these concepts to the running of my household, my business, my personal little business. I have some income, some capital investments, assets to maintain and liabilities, regular expenses, extraordinary expenses and on occasion some revenue. All the while, juggling between cold hard cash decisions and keeping people happy, especially myself. There are many reasons I want to make some significant transformable changes, the main ones are to make my mother proud, to be a good role model and mostly for the self-appreciation feeling one can only achieve by succeeding in spite of the odds stacked against you. I want to know, I want to apply and I want to engage.

Key concept number one: 

An increase in an asset is a debit 

Assets + expenses = equity + liabilities + revenue 

An increase on the left hand side is a debit, an increase on the right hand side is a credit

My minute mantra making the most of memorization.

Key concept number two: The heart of business is adding value to others and equity is the trust that the business will create value.

I had always assumed the only reason to be in business is to make lots of money or at least profit maximization. But there’s more to it than that, it’s the willingness to sacrifice to create something that someone else considers more valuable than money. What is the secret to this value creation?

Key concept number three: The General ledger contains all the businesses transaction records.

So what are these transactions to be recorded? How do we decide what needs to be recorded and when? What information do mangers want to capture and why? The Chart of Accounts can tell us which accounts are most prominent. Maybe this could help highlight the more significant activities of the firm. I think we need to understand the economic substance of business activities and then record relevant information as a reminder. This must be a huge job in large corporations. I wonder how it is possible to track everything. All I can think of is, thanks to technology, it sure makes it easier. Everything is linked, somehow, like a book telling a story, I imagine that’s what the general ledger is like. A window into the original ideas for being in business and possibly a glimpse into the future of where it’s going.

Key concept number four: Subsidiary ledgers are for those accounts the firm wants to record further details.

It makes sense that individual accounts would be kept for ease of use in the day to day running of the business. The general ledger would be quite bulky, if books were still used, with names, addresses and contact details of everyone the firm was dealing with, even with digitization, information would be difficult to navigate. I don’t like how casual ‘getting ripped off’ sounds. What kinds of assurances can accounting put in place? Does keeping separate records provide a cross reference of sorts, to help accountability? I guess Coffee Supreme has enjoyed success enough to indulge in nice dinners, skiing holidays and the company of cats and geese. I absolutely agree, that some of the best stories are told over coffee. How do businesses decide on limits and terms of credit? How long is too long and how much is too much?

Light bulb moment – The subsidiary ledgers are control accounts! Time and observation developing trust relationships, taking educated risks and managing those decisions by setting limits and terms. Making comparisons with ledgers to individual accounts maintained by separate people. How often should they be checked? Daily, monthly, when the account is transacted? Perhaps a hierarchy, owner, manager, employee, where access to records are restricted? It might all be a matter of trust, but also a matter of opportunity, regardless of the assumed ‘perks of the trade’ or ‘fringe benefits’. There are subtle protections put in place which help build the trust, reduce error and fraud and make business possible. Johnny Depp always makes me think of pirates. I guess even pirates needed accounting but probably not a lot of trust. So the journals tell the business’s story in chapters, once we know how to read them.

Key concept number 5: GST – Goods and services tax is 10% in Australia, paid, collected and payment or refund. The tax on production contributions collected by the government and paid by the consumer.

This is a complicated concept that may take me some time to understand. In my research I found there are GST free items, such as fruits and vegetables. I need to be aware of GST inclusive and exclusive items. I understand it is a liability from the firms’ perspective. This is a concept I will need to take care with as values will be affected and I’m sure the government will be monitoring closely too. How do we know if an item has GST included? Do we make assumptions or is it clearly shown somewhere? How can we check that it is recorded and not paid twice? I can understand that keeping it separate helps tracking but I predict this is one concept I find confusing.

Key concept number 6: Specialised journals, the separation of chapters in the firms’ story, the sorting alike business activities transactions almost into stories of their own.

I am somewhat familiar with sales, purchases, cash receipts and cash payment journal from my days as a tax consultant. I suppose the look has somewhat changed over the years. Digital dockets, automated electronic receipts, bank transfer numbers instead of cheques, the click of a button, the touch of the screen and it’s all safely stored in a cloud. I wonder how it all works today. I am excited to find out. But I still find GST more confusing.

Key concept number 7: The general journal records transactions that don’t match the specialised journals such a bad debts and credit returns.

Bad debts, these things happen and must be recorded. Goods sold or bought can be faulty. Nothing is perfect and yet the world still turns and business goes on. If these things do happen, this journal will tell the story.

Key concept number 8: Cash is the blood of the business. When the blood runs out, the business dies. Huge concept, this is the only way a business will end.

Key concept number 9: The bank reconciliation. The ominous task of keeping an eye on your cash.

I really liked the Xero video. I don’t have much experience with accounting software but it made it look so easy. It was easy to see the matching principle in effect and so much detail to understand the intricacies of business activity. I find it kind of exciting. I’m looking forward to learning more about software and other information technology advancements.

Key concept number 10: Current and non-current assets and depreciation.

It’s my understanding that non-current assets can be thought of as operating assets, which will deteriorate over time. The deterioration, is the depreciated value recorded as its usefulness is used up over time. I’m not sure how to value an asset and how that is recorded. The original cost less the depreciated value? But the asset is still useful for an undetermined amount of time, the true value not realised until the asset is completely useless and sold or thrown away. So how are assets true value reflected accurately? I understand the tax office sets some rules, which really only provide guidelines. Does accounting have to be perfectly accurate to be useful? I noticed that there was no clear explanation of current assets. I did some research to confirm cash is an example. Goodwill is also a confusing point of contention. Why is it considered a non-current asset? What is it really and how can goodwill be turned into cash?

Conclusion

I am developing pictures to go with the story but some are still out of focus. I can understand the logic of separating information and having checks and balances in place for security. It will be an interesting journey to discover new things and revive old ideas. I really like the logic of accounting and the reassurance behind the mathematics. 

Step 1 Study Guide Chapter 1.1 – 1.3 Sharon Field - Q89038205 | ACCT110811 - Introductory to Financial

Personal Reflections

What are the economic and business realities and who decides what gets recorded? Since each business experiences these differently, I can understand their records being quite independent. It makes sense that a firms accounts should help us to connect and engage with their individual economic and business realities, using bookkeeping to structure a relevant and faithful interpretation. A structure which shows the various parts and functions all working together, systematically throughout the whole firm. So what kinds of bookkeeping is common to all entities? And just how can a firms accounts be a hindrance to interested parties?

I read lots of things. It keeps me informed, entertained and my mind focused. I read things in all sorts of forms, fiction, facts, hard copy (I like the feel and smell of paper still), soft copy and imaginary copy? Yes, imaginary. Can you really believe everything you read online? Or in the newspaper? It can be difficult to sort through the fact from fiction, which is why I think it’s important to cross reference and engage with others for a better clarification, verification and understanding. It is fantastic to be able to communication using various forms of contact quickly and easily too. I have reconnected with peers, met new ones and invited new connections all with the common goal of learning. I am finding my way and it is paved with relationships the likes I have never experienced before and I like it!

I have a vague recollection of Luca Pacoli from ACCT11059, the 500 year old Italian monk referred to as ‘the father of accounting’. I’m sure the more I read the more I’ll remember. There are those foundations instilled such as the proprietorship concept and the accounting equation that still hold fast but I realise there is much accounting knowledge that needs reigniting to have a solid grasp. In my working days as a tax consultant, the matching principle was firmly implanted as a form of evidence of accountability and the importance of the dual entry accounting. So I am building on the past and infusing fresh perceptions.

I invariably notice how the world is geared toward right-handed inclinations. The simple task of washing dishes was taught to me by my mother to wash the dirty dishes on the left and place clean dishes of the right. As a consequence I have a tendency to address tasks working from left to right. One of the other accounting foundations I recall is debits on the left and credits on the right. I have always wondered why and I have a feeling I will understand during this course.

The digital age is absolutely fascinating. I am a little ‘old school’ which is commonly referred to nowadays as ‘the long way’ but I am still convinced doing the long yards ends up being shorter. You can’t skip steps and not leave something behind. If you don’t build a solid foundation the structure will crumble. I do understand how much faster and easier the digital age makes information available but you still need to know the how and the why for it to be useful. That’s what I hope to get out of doing this course. How is this information useful and why? What transactions best reflect the economic and business realities of a firm? How are these interpreted as data? How does double entry accounting ensure the relationship between the different elements of the business model that underpins accounting stay intact???? I want to deepen my understanding and transform the way I see business. Not just as a profit maximizing machine but as a wholistic entity encompassing all stakeholders.

The digital disruption for me means learning new software. I am in constant awe of things we can do via the World Wide Web, it’s important to keep up with it and it’s moving very fast. Where is it all going indeed!!! The revolutionary AI is rapidly advancing and I actually welcome its arrival. I’ve been dreaming of personal robots since the 80’s when we asked what we expected by the year 2000! I doubt reading will ever not be needed, so whether paper or screen we will still need to understand how to interpret the data, even though our robot buddy might be able to Google for us in the very near future.

I recall using journals every day to enter sales receipts, invoices and payments and other things. How much easier it is today with computer technology. Some of the books clients would bring were very heavy and other simply shoeboxes full of bits of paper. I kind of enjoyed organizing these unassuming messes into logical columns of data, but even more handing the bulky bits of paper back and hand over a tiny flash drive with all the information stored. I’m not sure what that data meant to them or what they used it for but it had to be better than bulky books and bits of paper! Most of the time it was the bottom line, they were most interested or the profit and loss statement but sometimes sales and costs. I still wonder what they could do with those numbers and how they helped them.

I always knew the owner was considered separate from the business for legal purposes and also for dual accounting purposes, two sides to a coin. The simple idea that transactions affect not only the firm but the owner as well. It is kind of crazy that computers can’t handle the notion of left and right but instead interpret as positive and negative. I never thought of the purchase of an asset as the obligation a firm owes the owners but that it what it does! Why would you pay for something that you wouldn’t expect to add value? By the same token the firms liabilities also need to prove their investment value. Trust is huge in the business world and I’m starting to understand the role confidence plays as a vital part of business success.

The accounting equation assets = equity + liabilities and its extension assets + expenses = equity + liabilities + revenue is cemented in my knowledge. All the power elements working together to give us a balanced view the business. I am thinking more than ever what each of these qualities represent from various points of views. I am thinking these components reflect the objectives and values of the business but what does that mean to the community? How do we read the data?

“The Conceptual Framework for Financial Reporting, as set by the International Accounting Standards Board (IASB) which is the independent standard-setting body of the International Financial Reporting Standards (IFRS)” it is good know there are rules and regulations guiding and governing the information a firm records and must report. This provides a confidence and assurance of accuracy, that what is being recorded is a faithful representation of the truth.

It makes sense that an asset owes you an obligation and a liability takes away value and equity as the part ‘left over’. You spend money to make money and spend more to maintain making more money! Accounting is the technique of showing the value of a firm in precise dollars. Money is the language and accounting is its interpreter. This is how we can keep track of business as it evolves. I think income is a better term for revenue. It creates an understanding of the obligation. If I invest money, I expect money to be incoming. I understand how revenue relates more to the transfer of value between equity investors and the firm as well as expenses. There’s no such thing as a free lunch!

I’d completely forgotten the concept of accrual accounting. Of course it seems ludicrous to complete the value of a firm only upon its demise. The simple concept of accounting for actions that arises as they occur rather than when cash is exchanged, especially with all the different forms of payments available. So we make some judgements and assumptions to account for the expectation of cash exchange, which is also assessed subjectively. I guess there’s a certain level of risk taking that may or may not pay off when going into business.

Well there are lots of lessons to be learned in business and accounting gives a solid foundation from which economic consequences can work out positively by assessing good judgements and better assumptions. Rather than focusing just on the bottom line, all lines can be tracked and matched against to avoid costly mistakes.  

Fabulous first lecture. Met some new faces and caught with some old faces with new hair! Learnt some new concepts and refreshed old ones. And here's my progress on Peerwise!

Peerwise 2017

My enrollment for ACCT11081 is finally complete and I have started on Peerwise! It's been a rocky start but I'm determined and I never give up!!! I have also joined the Facebook group and the UCROO group, but enough of that BRING ON THE PEERWISE 😄

Still a long way to go but I am gaining momentum!

ACCT11081 Introduction to Financial Accounting

It has been 2 years since I have studied accounting and the beginning of my return to tertiary education. I earned a Diploma of Business in 2015😤 and decided to continue studying to achieve a Bachelor of Business majoring in Marketing and Accounting😊.

A Few Hiccups

As a keen supporter of embracing innovation I welcomed the introduction of MyCentre. Unfortunately my study plan included studying ACCT11057 as a core unit and things have changed. This meant I am unable to complete enrollment into the new core unit, ACCT11081 until certification day. The frustrating outcome means a delayed start to Peerwise, which was an awesome learning technique but even more frustrating I am unable to access the etext I have purchased!😠Not one to give up so easy, I have been preparing questions for Peerwise and adding a little humour to keep things amusing. Who said you can't study and have fun! I am glad to be blogging again, it really helps to form perspective and engage in mutual learning.

How's the Fam Bam!

I'm happy to report everyone is doing great! My gorgeous daughter Daisy is settling well to grade 1 life and Ryan is the most improved student for this semester, receiving awards academically and personally, so proud of them both. We have also welcomed a new family member, Slinky a sausage dog, dachshund cross coolie, a rescue dog from CAA. He is very much adored by all of us and keeps us all safe and loved.