Reflections on Chapter One & Three

CHAPTER ONE:

I agree that the whole concept of accounting is to assist us in understanding what and how a business is operating, although it varies between different businesses. Each business is original, and has its own economic and business realities. I was interested to learn just what accounting really is, what it incorporates, and how it helps us connect with the business realities.

I liked the deconstruction of people and firms operating and interacting in markets, it was in depth detail, and it really broke it down enough to understand what the author is trying to say. Accounting information is used to seek out and understand what is going on within a business.

Reading the section that explains just how many Australian and New Zealand company directors have been educated in accounting really shows me just how important and helpful it is to have an accounting background for any position within a company. The questions being posed throughout the reading make you stop and think. They make me question myself and what I believed accounting to be before starting this course.

Being able to relate and apply the information and concepts of accounting back to real life situations really helps me, as the reader, to understand accounting on another level. I agree with the statement that business reality for firms is a very diverse and constantly changing world.

The section explaining the companies within Yeppoon that would keep accounts just goes to show that it doesn’t matter how big, small or what kind of business it is, accounting is necessary if it is to operate correctly as it is the key to any business.

I like the fact that the information that is provided is teaching me how I can utilise accounting information in order to further comprehend the economic and business realities of any company.

I believe that accounting does make it easier to engage with and understand what is going on within a firm. However, one must initially understand the basics and essentials of accounting, and know how it is helping us to make sense of the madness for this to happen.

I have never done an accounting subject before, not even through high school. I have done maths, but nothing this in-depth into the world of accounting, so it was pretty daunting for me starting this subject. However after reading through this first chapter, and seeing that even though the amount of information is extensive, it is broken down and explained so that it makes sense. It is not just a heap of big words and concepts that I will struggle to understand. Applying it and putting it into realistic terms is what helps me understand the information.

From this chapter, I have however thought of a few questions –

1.       Why do we destroy value?

2.       How do businesses create value?

CHAPTER THREE:

As I continue to progress through these first few chapters and re read the information a few times over, I am beginning to grasp the concepts a bit better and am becoming more confident. I thought that this chapter was jam packed full of information to learn, and as much as I didn’t want to read the whole chapter, I found myself continuing to read on.

I kept coming back to those questions that we have been asking ourselves about what accounting is really about and how it helps us to understand business realities. The first thing I was surprised about was that businesses do not have a set format for their financial statements, they do not all have to include the same specific information.

This chapter really helped me to interpret my firm’s balance sheets, changes in equity, and the income statement. By reading through this chapter, I was able to understand the information from the tables in my firm’s annual report and that made it so much easier to enter the data, because I had some idea of what I was typing about.

Chapter three contains a lot of useful information for me, as the reader, and it is difficult to retain all this information and make sense of it when there is so much to take in and know. A few of the concepts now however are making more sense to me, such as parent companies, ratios, dividends, cash flow, equity and comprehensive income. I am not 100% confident, but they have helped me dramatically in preparing stage one of the assignment, particularly the spreadsheet!

Sometimes the chapter just seems to carry on and on and the words just become a blur. It wasn’t as interesting as I found chapter one to be, however the information was useful. One again though, it is good to see in this chapter that the information has been broken down by the author and explained in a sense that helps me to interpret. For example, the use of Ryman Healthcare and showing us where the information we are learning is being put into practice.

From what I have learnt so far, I am very interested to read on and investigate more into the world of accounting.

I have a question regarding chapter three –

1.       Are there specific rules pertaining as to what information a firm has to include in their financial statements?