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Accounting Intro and Chapter 1 step #1

Introduction(Learning, breaking bad habits and communicating online)

Martin introduces a concept of ‘Real learning’ and focuses on the need to develop an understanding and finding ways to apply concepts rather than rote learn and regurgitate information given to us in this unit.

This is going to be tough, obviously something that requires more effort on my part to stop just reading and regurgitating and focus on understanding and the best way to develop this understanding IMHO is to ask myself the questions: Why? Why am I doing this unit? What do I want to gain from this unit? And How is or will this be relevant or useful to me in the future?

Six differing conceptions of learning follow this and Martin suggests that as we go deeper into what learning is each concept includes and builds on the previous ones concluding with the idea that learning involves changing and developing as a person. What does that even mean? In my mind I am reminded of how we learn to walk…First you will crawl, and maybe you would receive help from your parents propping you up or putting you in one of those baby walker things until you are strong enough to stand and start leaning on coffee tables and couches or chairs to further strengthen your leg muscles. Eventually we take the first tentative steps maybe walking from one parent to another or from coffee table to couch until finally walking on our own. The thing about learning to walk is once we know how, it just becomes a way of life, we need it to LIVE in this world, sure you can survive without it but you will be very restricted in everything.  I think that’s what Martin was trying to get at here… We need to learn in order to really live in this world. The thing is no one tells you how hard it is to un- learn and re-learn something that’s become second nature (to me at least) as a student, but painful as this process may be, I can tell… it’s going to be worth it, Man am I ready!

Keeping motivated is something I personally struggle with, and as I type this I am reminded of something a teacher once said “sometimes you’ve got to do things slowly to get them done quicker” and then something about Eating an Elephant, I couldn’t remember much after that so I googled it and found that it actually relates to making what seems impossible possible. So here is the video for you too.

 

I didn’t know I’d been learning the wrong way did you? I’ll admit the idea of having to un- learn how I learn and re –learn how to learn is still a bit of a confusing concept to me but hey ‘If at first you don’t succeed try and try again” after all did anyone tell you just how many times you fell over and had to get back up again when learning to walk? No? Well that’s just

Online communication?

I like to think I’m a good communicator (most of the time) but I must admit I find face to face communication a lot easier than online communication, in fact it scares me just a bit, probably because it feels so public, like allowing all of you see what it actually looks like inside my mind and you will make judgement regardless of whether you want to or not and I think the idea of saying/ posting something online is something I liken to stepping into a burning building. You don’t get a second chance to make a first impression, and most times if I am unsure of myself it is a lot easier and often better in my experience to stay silent. I can’t do that here in this blog, and being this venerable to a group of strangers on the internet is both liberating and terrifying at the same time. But as Martin said its interact or die in this unit and with so much at stake how can I not. I have nothing but my time and money to lose, both of which are valuable but fail to hold a candle to majorly altering my life as I know it. Let’s do this guys! Baby steps though: D

Chapter 1

The idea of accounting being more about understanding what exactly is going on in a business or rather using accounting (like a tool) to help us understand the economic and business realities of a firm, is a concept that challenged my preconceived notions of what I originally thought accounting was. . Doing accounting in high school you were given a list of transactions and told to literally “Do the books” I never questioned if these numbers were an accurate representation of reality or not, I just assumed they were and did as I was told (being spoon fed from primary school until the end of High school has brainwashed me) and I feel like real learning begins in university. Finding out that the transactions listed in an income statement, balance sheet etc. was just a reflection of the realities a business may be facing and not a real indication of what was happening was eye- opening, and I can see how understanding this concept may aid CEOs in making decisions in business.

If so many CEOs have accounting backgrounds there must be some substance to it… I want to know why?

Reading further I felt like I was flexing a muscle that was stiff from under use thinking accounting was only about the numbers is something I was guilty of, but I was relieved to find out that it didn’t have to stay that way. I am starting to feel slightly optimistic (maybe even a little excited) about learning how exactly we can use accounting to understand what those numbers represent.

I enjoyed the figurative walk down the main street in Yepoon, though I probably could’ve done without that ½ page list of all the businesses in Yepoon, and found the pictures to be more stimulating. I understand that the point was to illustrate how diverse business is (even CQU is a business) but man it was long. Also why did we learn about the difference between the different types of businesses? Does it change how we use accounting to view the firm?

That being said the idea that businesses are everywhere and that all of them employ accountants in some way led me to the conclusion that because businesses are everywhere accounting can quite literally take you anywhere too, and THAT’S EXCITING!

Something else that I found interesting was the mention of customers as key stakeholders who may be interested in the operations of a firm. What exactly would make customers interested in the operations of a firm. Does it have to do with the products and or services these firms provide and brand loyalty?

I found the history of double- entry accounting to be interesting, and was confused as to why it exists. Further on in my reading I found an answer: proprietorship and it illustrates the trust relationship in business that is necessary for each transaction to take place.

I liked that an entire page’s worth of information on the concept of proprietorship could be summed up in a simple equation, though perhaps in my opinion it would have made it easier to be given an equation first and follow that with an explanation. It felt like being given an answer first before knowing the questions that were asked. E.g. What does each part of that equation represent? And What is the relationship between the different parts? I enjoy things that can be explained simply first and then building in complexity as I find myself to be even more confused when given too many very different examples.

Viewing the balancing of debits and credits in double entry accounting as a by-product of the system rather than the reason for it was a bit hard to mentally digest… So what’s the reason then?

 

Accounting is a powerful way of viewing a business. Accounting is a powerful way of viewing a business. Accounting is a powerful way of viewing a business. Why? Is it because it provides a dual perspective enabling all those CEOs to see things from both the owner’s point of view as well as from the perspective of the firm itself? Is that maybe why the all have accounting backgrounds?

I liked seeing how the five elements of accounting were also represented in the extended fundamental accounting equation and am looking forward to learning how I can apply these aspects may illuminate areas in my study of accounting that are dark and help me in better understanding of a firms overall financial position.

 

When I think of ‘value’ it usually triggers my brain to think of things that are ‘valuable’ or have ‘value’ like money, having a job or a place to live even the air I breathe adds a kind of  ‘value’ to my life, but then there are things that have different levels of value to different people. Value then is about perspective and it’s exactly the same in business ‘one man’s trash is another’s treasure’ the idea that something that creates value in the firm’s point of view, destroys value in the equity owner’s point of view, is fascinating (if I’m understanding it correctly that is). Finally the entity concept begins to make a little sense.

I liked the idea of revenue and expense accounts as ‘temporary storage’ accounts only being emptied every so often rather than being adjusted everyday.

 

The idea of transfer of value was interesting and made a lot more sense given the perception of the relationship between a firm and its equity investors as being two sides of the same coin. But what happens to the cash then? If not a revenue or expense…

 

All in all I ended up enjoying chapter one even if my brain feels like it’s going to explode, I am looking forward to the next chapter.