Heaven knows how scared I was when I knew I was going to be learning Accounting. This is a course or subject I would rather not do my entire life because I felt it was difficult and requires so much to understand it. Little did I know that I will find it easy to learn, probably because of the faculty taking the course. I literally prayed to understand this before the brush up sessions.
What intrigued me was the method of teaching, the faculty was extremely patient with the class irrespective of our various educational backgrounds and knowledge of the course. My professor as I fondly call him is an amazing teacher, he makes it easy for one to learn and understand the course with his traditional way of teaching from the base.
The first day came for the course during the brush up and we were taught basic accounting. We were meant to understand that the reason for studying the course is because we are being trained to be business managers, hence the need to understand cooperate financial accounting. I also understood that another reason for one to familiarize his or herself with the knowledge of accounting was to be able to get information as an investor, in terms of analyzing and identifying financial statements.
One of the key users of accounting is the investor (current and potential), whereby a decision is to be made whether to invest in the business or not under the considerations of return, risk and time; that is Return on Investment (ROI). For the manager to be able to answer these questions, he must make a report stating clearly the financial statements of the company.
There are 4 +1 financial statements
- Statement of financial position. . This is also known as balance sheet, and it represents assets, liabilities and equity of a business.
- Statement of profit or loss. A record of revenue and expenses incurred by a business at a given time.
- Statement of change in equity. This statement explains the changes in a company’s share capital, accumulated reserves and retained earnings over a given time.
- Statement of cash flows. This financial statement provides all cash inflows and outflows of a company; could be operating, financing or investing cash flows.
- +1 Notes to the accounts. This gives further explanations to the above four financial statements.
There are also methods of analyzing financial statements which are:
- Horizontal analysis
- Vertical analysis
- Common size statements
- Trend percentage
- Ratio analysis
So far, I can now identify the various financial statements in a company’s annual report and the key terms in financial accounting. It was evident that I could do these without any hassle or assistance from my classmates during the recent assignment given to us by the faculty. I am also familiar with the horizontal and vertical analysis method of the financial statements. All thanks to my dear Professor. I feel very optimistic about doing outstandingly well in the course with the help of my teammates and the faculty.