Chapter 1
There is always an impression in my mind
that accounting and those financial statements are just collecting and
recording and summarizing the data of the transactions of an entity and the
more important part is analyzing those data.
Can number really create the reality? I
think it may partly be true. Indeed the numbers and the financial statement may
clearly show the performance of the company, but it cannot fully represent the
condition of that company, especially if there is big change in the world
market. The culture and environment in a company in some extent, to my opinion,
also influence the company’s future performance a lot. Because the culture and
reputation of a company has great influence on shareholder, customer, and
investor’s confidence, which will not, directly represented by the numbers in
financial statements.
What’s the differences between
trust/beneficiaries and company/largest or only shareholder?
What would real bookkeeping in a company be
like? There must some rules dealing with different situation happened such as losing
information, lost invoice, wrong numbers on invoice and some other possible
situation. It will happen in reality especially small business.
What mode will the business use to record
to ensure the validity of the data? To
Question 1-1
Why do we have double-entry accounting? Why
do we put in everything twice? Why not just once?
To my opinion, the double entry accounting
is used for recording the usage of the money and the source of the money, to
backup the data and ensure the accuracy of the data input. Errors can be
detected easier.
Question 1-2
For your firm, identify three Assets, three
Liabilities and three items of Equity. Describe what each item means to you
(you may find some footnotes in your frim’s financial statements may help)
Asset
Trade and other receivables – transactions occurred
but not yet receive the payment yet
Cash and cash requivalents – money in bank
account
Intangible assets
Liabilities
Trade and payables – Money owed by a
business to its suppliers
Deferred tax liability – a company owes and
does not pay at that current point, although it will be responsible for paying
it at some point in the future
Short term provisions – provision is an
account which records a present liability of an entity to another entity.
Equities
Contributed
equity – reflects payments of cash or assets that the owner have made to the
company in order to increase the company’s equity
Reserves – the
part of shareholder’s equity except for basic share capital.
Retained earnings
– the portion of net income of a corporation that is retained by the
corporation rather than distributed to shareholders as dividends.
Chapter 3
According to the article, almost all listed
companies will not just be one company but a group of companies. The
consolidated statement shows the general financial position of the group of the
company, but can we know the individual company’s full information of financial
situation, asset, debt and dividends each year by looking at the footnote of
the consolidated financial statement? Or they will publish individual financial
statement to the public?
If one company is partly owned by two
company, what the two company’s consolidated financial statement would be like?
If the company is focusing on two different
area, how can the financial statement reflects the performance in either area
in that period? For example, HiTech Group Australia focus on recruitment and
consultation. How to show the revenues and expenses from each branches on the
financial statement?
Each business have different culture and
framework. I thought the ratio just offered one option of reference or standard
to evaluate the performance of the company.
The early bankers’ contribution to
development of ratio is very great. There must be many kind of ratios invented
in later years and the way read them must have changed a lot.
