ACCT11081 – Zac's blog

Hey everyone,

You will find my assignment steps 3 – 5 attached here:

Step 3 – 5

Step 4

Step 5

your feedback is much appreciated.

I like being independent and trying to do things for myself, I like learning by doing. I don’t particularly enjoy being ‘spoon fed’ information so I decided to try to do this exercise on my own before watching the lecture video. For the most part, it went pretty smoothly, however I soon realised that my credits and debits didn’t balance in the first column. So I watched part of the lecture video. Due to a lack of time this week (as I am going away for a couple of weeks soon) I just skipped to the part where Maria was illustrating how to do this part of the assignment. She said something about comprehensive income being included in equity and being double counted because of it. After that it became pretty clear that I needed to check my statement of equity, and sure enough there were items of comprehensive income included in it. After compensating for this, my trial balance now matches perfectly and the difference between the credits and debits on my income statement is equal to the profit for the year. Overall, this task was not very difficult and did not take very long, but I did learn a lot from it.

For a start, I was familiar with the idea of adding the debits and the credits to ensure they balance from reading the study guide, but I wasn’t really sure what a trial balance looked like. I did not realise that we separate our income statement and balance sheet + equity on there own trial balance. Overall, doing it makes it seem so much more intuitive and it makes a lot more sense now too.

One thing that I started to get the sense of was why debits and credits are used. I understood Martin’s explanation of it, but I must admit I still didn’t see why it was advantageous. I knew that they are attributed to the entity theory, but I still didn’t see why that would make them superior. After completing this exercise, I thought back to hat it would have been like in the days of quill and ink. I realised that when they added all the figures together, it could of been quite tedious if they had positive and negative numbers. It would be quite easy to make a mistake whilst adding all these figures, especially since they did not enjoy the use of calculators. Using credits and debits means that they simply had to add up the numbers in the column. This would reduce the likelihood of error in the calculation. And whilst it is not the primary purpose of debits and credits, the trial balance would have been invaluable in identifying mistakes made whilst adding the numbers.

The whole process started to appeal to me and I started to truly appreciate how logical and beneficial the process is. Double entry accounting also allows us to separate the different components of the accounting equation. This process would not be as easy if we did not use debits and credits.

Overall, this has been a really enjoyable exercise which has given me substantial insight into the world of bookkeeping.

You will find my excel file here:

Step 5

Hello everyone,

So we are nearly at the end of term 1. Wow, this term has gone so quickly. It seems like I just finished initially typing in my companies financials. And now, here I am finishing up my final piece of assessment for this unit. Below you will find links to steps 7 – 9. I have not yet finished polishing them up, so think of them as being a rough draft. As always, everyones advice is much appreciated.

Zac

Step 7

Step 8

Step 9

zacchary-hulsman-ass1-step-4 (1)

Hello everyone,

I have finished restating my financials, unless anyone suggests changes that should be made. All advice is appreciated, I will update this page later including how I found the assessment, but for now I will just leave it at this brief description.

zacchary-hulsman-ass1-step-4 (1)

Zac

I know, i’m late to post this. I had not read through the entire assignment task prior to this week and was under the impression that steps 5 and 6 weren’t due until week 5. Whilst this is technically correct, the draft was due to be posted last week. This is the result of my own disorganization, I probably should have read thought the entire assignment task on week 1. Anyway, to resolve this so it does not happen again, I have filled in the term planner and I will be sure to check it DAILY. Anyway, please comment and feel free to criticize my assessment.  I plan on doing further work on step 3 as I think my pages on my blog needs improvement.

ACCT11059 assesment 1

Hello everyone,

So, we are at week 3, all ready! The last 2 weeks went pretty fast, and now I am here, contemplating how its possible that I am just days away from completing one quarter of the term. 12 weeks really doesn’t seem like all that much, and I could see how people could easily procrastinate and then end up weeks behind on there assessment.

Any way, a few questions I had. Firstly, something that I noticed on my firms financial statements is that the non-current assets are listed first, followed by the current assets, than the current liabilities, and finally, the non-current liabilities. Why would they chose to lay it out like that rather than going current assets, non-current assets, current liabilities then non-current liabilities. I guess I’m wondering whether there is a method to their madness, or if its purely arbitrary?

Now, I did have quite a few questions I wrote down, however most of them have been answered by my friend google. So, instead, I decided I would just try to explain a few of them instead.

What is statutory loss?

What is Underlying profit?

I came across these words, statutory loss and underlying profit, in my annual report. So, from my current understanding a statutory loss I guess could be described as being a technical loss, as it is based on how one would report for a financial statement in accordance to accounting standards.

Whereas underlying profit/ loss, is referring to when one takes away certain factors that may have otherwise meant a higher profit, factors that were not necessary but perhaps were used as a means of investment, aimed at achieving future economic benefit, or large one off purchases, things that could give a false indicator of the company’s performance. For example, if a company had acquired $1 billion in shares of another company, they may remove this from their profit and call it underlying profit. So, if that company was to make $500 000 that year if it wasn’t for spending $1 billion, the underlying profit would be $500 000 whilst the statutory loss would be $500 000. In a sense I guess this differentiates companies that make a loss due to poor management as opposed to companies who made a loss due to high spending. To illustrate, imagine two companies which both have a revenue of $500 000 per year. If one spends $1 billion that year in buying a new subsidiary company, so they made a statutory loss of $500 000, and the other company broke even but did not make any investments, so they made a profit of $0, who would you rather invest in? the first company chose to buy the subsidiary company, and the loss was not because of poor management, but rather, for future economic benefit, they could of chosen not to buy the subsidiary company and earned $500 000 in profit, but they didn’t because they felt this offered better opportunities long term.Whereas the other company, whilst technically not making a loss, simply didn’t turn a profit due to poor management or unfavorable market conditions etc.

I hope that explanation kinda makes sense, but it does raise questions, what are the limits to these underlying factors, are there rules on what can and cannot be included as underlying profit? Surely there must be some.

I would think that it underlying profits could be an effective tool in understanding a businesses realities. As it really strips out the cause of losses and profits, rather than just giving figures at face value. You could also compare statutory losses and underlying profits and see how much the company is investing, and using the financial statements and their notes, we may even be able to see where it is that these companies are investing.

I did have more questions, but most seemed to have been answered during the lecture. Please leave your thoughts in the comments.

Hey everyone, I guess I should start this with a little bit of an introduction. I am a 20 year old student and live in Bundaberg. I am currently enrolled in a Bachelor of Accounting through CQUniversity, which is what brought me to make this blog. Will I like blogging? Will i find it to be fun? Who knows? I’m here to find out. As for my past, since finishing school back in 2015, I have tried several roles, mostly in the construction industry, to find my dream job eluding me. So, trying to find my passion, I decided to study at university. And that brings me to where I am now, posting this blog on my page.