Study Guide Introduction & Chapter 1
Study Guide: Introduction
Beginning ACCT: Accounting, Learning and Online Communication has me feeling a strange mixture of dread and excitement. I feel dread because the last time that I attempted an economics subject out of the blue (that is, without a succession of inter-related subjects beforehand to give one a ‘running start’) I was a first year student in my first degree – a Bachelor of Town Planning – at James Cook University. The subject code – BU1003: Introduction to Economics – is still etched into my memory (I believe this to be a symptom of the trauma). Without diving into the gory details, I failed my first ever economics-related subject miserably, and it left me a particularly nasty scar.
Truth be told, this would actually be the first of a few subjects I would fail in my under-graduate degree (studying is at the bottom of every 21-year olds priority list, right?) however, this failure stung a little bit more than the others. Was it because I was forced to stay back and re-take the subject in my second year of university – whilst my friends pressed on into other more interesting and engaging subjects – and I still only scraped through with a ‘Pass’ mark? Not really – I just made more friends. I think it was because I had always had such a strong interest in business, at least on a superficial level, anyway.
You know the type – they watch Shark Tank, read the Australian Financial Review, follow success-inspo instagram accounts, and keep up with who is in and who is out of the Forbes 30 Under 30 (as if they have in a horse in that race). These people are the type that knows who-owns-what businesses around town, and when and where new businesses are popping up – all the while thinking they are more ‘Warren Buffet’ than everybody else. Yeah, I was one of those annoying people. That right there is why my BU1003 failure stung so badly – I really thought I had a good grasp on what business was, and how businesses succeed. I had this self-appointed business prowess – there nothing at all to substantiate this, by the way – but it didn’t stop me from firmly believing that the nitty-gritty of business – the numbers, the accounting, the spreadsheets etc. – would be a piece of cake. As it turns out, business success is equal parts self-confidence/ perseverance/ diligence/ and whatever else AND knowing the numbers – how they work, what they mean, and how to make them work for you.
Fast-forward 4 years – I’ve finished my Bachelor of Town Planning, and beginning a Bachelor of Property, and it seems I’m meeting with my old-foe reincarnated – BU1003 is now ACCT11059, but the premise is definitely similar. However this time, I’m ready to place some emphasis on THE NUMBERS. As daunting as it may be, I’m excited to be an active participant in my learning experience this time ‘round. If I’ve learnt any lessons from the past, it’s that in our modern society, with the ability to start a business or social enterprise at our fingertips, maybe not enough emphasis is placed on THE NUMBERS. Why do I think that is? The numbers aren’t sexy enough. No business or sporting great ever made a punchy, instagram-able quote about the importance of the numbers in their business working – it’s sure as hell what got them over the line, but why mention the importance of balancing spreadsheets when we can talk about owing our success to blood, sweat and tears? But hey – that’s what sells. Emotional, gritty, business success stories are what people want to hear from entrepreneurs (and it’s what sells books and tickets on speaking tours).
I’m excited to look at how to develop my own understanding, rather that ‘rote learn’ which was undoubtedly my biggest problem the first time I attempted a business/ economics/ accounting related university subject. I am exceptionally glad to hear Martin is a seasoned veteran when it comes to teaching first year accounting. His acknowledgement that everyone should (at least) pass helps put my anxiousness at ease, as I find myself needing to be re-assured that this is only an INTRODUCTORY unit, and not a third year statistics subject. Deep breathes. The general premise for this unit sounds fantastic – an understanding of how accounting works in reality – it’s exactly what I am interested in and what I need to know. The idea of being assigned our own listed company as a way to become familiar with a firm’s accounts is brilliant. This is exactly how I learn best – through real life examples. I seriously relate to the idea of vacuum cleaning my brain at the end of each semester and the superficial kind of learning that most people take part in when they’re young and their focus is elsewhere. But I’ve had my time in the sun – and I’m ready to truly engage in constructive, personal, reflective learning!
During my previous degree at JCU I studied full-time face-to-face, so moving to a degree that is full-time online is going to be quite a challenge for me, I assume. I’m a very social person, so going into uni everyday was a pleasure for me – making new friends in tutorials and workshops, speaking to my lecturers, and hanging out with friends before and after class on campus were all huge draw cards for me to actually come to uni and attend my classes. Studying my new degree completely online is especially daunting to me for this reason. I completely understand and appreciate the emphasis Martin puts on the need to get involved and interact with my classmates in this unit. The only difference to studying at JCU will be that this time around, we’re essentially all hanging out together from the comfort of our own homes! (God bless the Internet!).
I am very intrigued by PeerWise as this is my first time using such a program, however I love the general premise of using it as a group-learning tool. I’m outgoing and exceptionally social in real life, so here’s to hoping I can reflect that in my online personality for this unit. I am really the internet age personified, so I’m hoping that navigating a degree online shouldn’t be too difficult. For all the things we Millennial children missed out on – I am so glad the internet is second nature to us. In saying that, I am more than happy to admit I am a dunce at anything technology-related that isn’t instagram, Facebook, blogging, or YouTube. I mean, MYOB? Xero? ReckonOne? I’m guessing these are either sports cars or the lead singers of a few 80’s punk bands? Oracle E-Business Suite and Oracle Hyperion are definitely luxury Balinese resorts.
Upon concluding the introductory chapter, I am pleasantly surprised. I was not expecting the content that Martin has produced. Honestly, I was expecting a lengthy type-lecture of all things deadlines, dates, word counts, plagiarism and definitions. Instead, I was encouraged to assess how I currently learn (memorizing and regurgitating), and how I can improve this through engaging and understanding. I was not expecting a walk-through of PeerWise and creating our blogs, which I really appreciated (MUCH more efficient than being left up to our own devices). I think I will really enjoy reading the weekly chapters and writing my own KCQ’s because, if you haven’t already noticed, I have A LOT to say about … well … anything and everything. This semester I’m going to have a lot to say about accounting, and I might just surprise myself with my quality of input.
Study Guide: Chapter 1
I’m going to be completely honest – not once have I ever intentionally sat down and thought about what accounting is. Despite my long-standing interest in business (particularly small business, where one might argue that basic accounting knowledge is especially important) my awareness of accounting is superficial at best. Reading the first three paragraphs of Chapter 1, I would – in my own words, with my rudimentary understanding – describe accounting as the process of recording the monetary in-goings and outgoings of a business. If I ran my own business, and I remembered to record my money spent on the business, and record the money customers spent at my business, I would consider that pretty good accounting for an untrained account – however I’m sure there’s much more to it… The concept that accounting is a way of viewing business – a simplification of a firm’s economic and business realities – is completely new to me, and I believe this highlights the importance of the NUMBERS in business, like I spoke about previously in my reflection of the introductory chapter.
We truly are surrounded by businesses in our daily lives. Many businesses present themselves to their customers or clients through physical brick-and-mortar locations. Such business can provide services like medical practices or engineering firms, they can sell products like clothing stores or industrial retailers, or they can provide a mixture of both service and product, like cafes. Some businesses sell directly to other businesses (especially if they are a manufacturer or wholesaler) whilst other businesses provide their goods and service to individual members of the public. These businesses can then be categorised by the way they are ‘set up’ in the eyes of the tax department – they can be sole traders, partnerships, and trusts. I know that seems like a lot, but I haven’t even scratched the surface of ONLINE BUSINESS yet! An entire new world and way of carrying out standard business exists thanks to the Internet, and the best part is, it’s constantly evolving and improving. Regardless of whether a business sells x or y, to group a or group b, is brick-and-mortar or completely online – all businesses have accounts, whether they’re making money or losing money. The ‘books’ as they’re called, might be tended to by a department of corporate accountants or a part-time bookkeeper, depending on the size of the business and its accounting requirements. I’m going to be honest, my knowledge of the ‘books’ is to the extent of the saying, “cooking the books” – and I’m a little too law-abiding to even know what that entails.
In regards to business structures, I’m familiar with the idea of a sole trader and a partnership, but not at all with a trust. The idea of trustees and beneficiaries seems complex, and I’m not sure what kind of benefits a structure like this would provide? From my limited previous knowledge, I assume the benefit is tax related? I would really like to better understand the structure of a trust through some real-life examples, so I will look into this further in my own time. I love the idea of using the spreadsheet designed to help understand what’s happening in our own companies – I really think this information will benefit me in the long term, particularly in relation to investing.
I am finding the history of accounting, and double-entry accounting, very interesting, and again – it’s something I have previously known nothing about. However I will say I would have assumed that the Greeks would of made it widely known and popular, so I am surprised to see Luca Pacioli’s name. What I am grateful for is the accounting software we have access to now (the names of which I was making fun of only a few paragraphs ago). Physical record keeping sounds incredibly tedious, with the added risk of precious paperwork being destroyed so easily. Although it must be acknowledged that todays accounting processes do rely on a stable electricity and Internet connection. I do find it hilarious that double entry accounting was a historical ‘accident,’ too.
The role of a journal (a record of daily transactions – in the order that they occur) is essentially what I thought accounting was in its entirety, so to learn that a ledger is the categorization of these same transactions into assets, liabilities, equity, revenue and expenses is a lot to comprehend. Duality seems to be a strong, re-occurring theme in accounting – from recording in the ledger and the journal, to the separation between the actions of the firm and the firm’s owners. Although this information is written in simple terms, I’m having a little trouble grasping it. Maybe I need to read a little more on the subject or, ideally, search for some diagrams or visual representations. The more I am challenged at university, the more I am looking for visual aids to help me understand something – I think I’m beginning to understand that I am a very visual learner. In regards to debits and credits, I am slightly familiar with the idea of left-hand side and right-hand side from very early days of helping out in the school canteen and looking at some of the in-goings and outgoings. I have not, however, ever truly looked at this on a computer, so seeing the negative and positive numbers actually look like on a spreadsheet will be interesting, as I’m currently having a hard time imagining how it would be laid out.
I did not understand how pivotal the element of trust was in business in a practical sense – but now that its been explained, it really is quite clear how mutual obligations (and duality) are the foundations of all out business practices. OK – these accounting equations are not my friends. I have no idea what this is about. I’m looking at the equation and reading the information, but it’s not sticking inside my head and I’m not imagining it in a real-life sense. That’s ok – math’s was never my strong suite – I’ll research this further in my own time. I am thoroughly enjoying the explanation of the 5 elements of accounting. Section 1.4 builds on the previously presented equation of assets/ liabilities/ equity, however in this part of the chapter it is paired with the real life example of Coffee Supreme. Putting concepts into a practical scenario it so much easier to understand. NOW I’m actually starting to understand how they work in that equation! I am, however, having a little trouble comprehending ‘equity’ as it seems a little more of a complex ‘conceptual reality.’ Revenue and expenses were two business concepts I believed I had a pretty firm grasp of – but apparently my existing knowledge was superficial at best. It is not the deeper understanding of revenue and expenses that I am finding hard to grasp, but rather their relationship to the interest of equity investors. I definitely feel like I’m going to need to seek out a diagram or a video to further help me understand how this works. Upon concluding my introduction to the work of accounting, I am feeling pretty dumbfounded at just how much more complex and intricate accounting actually is – as apposed to the ‘bean counting’ I envisioned before. I’m going to be kind to myself and allow myself to not completely understand a few of the concepts we have covered (namely all things EQUITY!) as this is my first rodeo. However, I will NOT let myself become complacent and I am going to take an active, engaged journey with accounting – which means I am now off to post in PeerWise, hop on Moodle, AND YouTube some simply ‘accounting for dummies’ style diagram videos to compliment todays learning.
Thank-you for tuning into another episode of
“Cooking the books with Caity!”
Cooking the books with Caity 