Chapter 1 - Key Concepts & Questions

Throughout chapter 1, I found that the author kept me very engaged in the reading by asking questions. It had me constantly thinking of real world situations around my local area and remembering back to other definitions or examples that I have learnt in past subjects that I have completed in my degree so far. As I have completed a few accounting courses now, so overall I found this chapter a very great ‘re-cap’ or summary of the information I have previously learnt from school subject, university courses (subjects) I have completed and my current job as a trainee accountant.

I agree with the concept that businesses are everywhere. This concept made me think of the accounting firm I work for as a whole and how diverse our firms cliental are. Clients range from individuals that run a small store in the local community, large business that operate Australian wide, subcontractors that work for large, well known mining companies to clients that provide services to the community or sell goods and even primary production businesses. Knowing this I started to think of the structure these businesses have.  In my current job I have found that I have come across all types of structures mentioned in Chapter 1. The most common business structure I see is privately listed companies and trusts. I feel these are the most common because they are great ways for profit bearing business to save in Income Tax.  This is because companies are taxed in Australia at a flat rate of 30% and trusts allow the profit to be distributed to member in whichever way the members choose or the financial advisers see the best tax saving opportunity.

 

“You have to know accounting. It’s the language of practical business life” I love this quote from Charlie Munger as I find accounting is really a language of business life and not everyone know what accounting really is. I have also found that the concept bookkeeping without books is becoming the future of accounting or some could argue has already occurred. I love accounting software packages! I love just love them!! Nearly every organisation is using some sort of software package, and if they are not, accountants will generally process there information through a software package when they receive the information regarding their books. I feel like software packages do all the background work for you, double sided entries are completed for you through the process of writing a cheque or pay a bill.  From experience software packages just save the bookkeeper of the accounts so much time. The five elements of accounting was a great way to introduce financial statements to those people who do not know what financial statements are. I, personally already knew this information but when I was reading this I found that it was such a great way to introduce what is included in each report and the purpose of each report.  

 

Overall I found that Chapter 1 was a review of the information I have already learnt. I wish I had completed this subject early in my degree as when looking back the explanation, examples and accounting concepts I was given in previous subject were not as easily explained as they have been here.