Accounting class has been filled with so much fears and expectations for me. I had thought that I and accounting had no business any longer but alas! Here I am face to face with a course a dread so much. Anyways, thank God for the facilitators they are doing a great job; my fears are gradually disappearing.
One interesting topic we have looked at in this course is “Business Dynamics”. This class and topic was so interesting and I am excited and pleased to share my learnings from this topic/class. As one who owns or runs a business or organization, there is a need to ask yourself:
“Are you really in business or you are just busy?”
People engage in business for different purpose which is basically to:
- Make profit
- Create value
- Impact lives
An internal business dynamic looks like the below:
Organizational Beacons (Mission, Vision, Core Values)àOwners Requirements àStrategyàResourcesàOutcomes
One of the major tool that drives business performance is decision making.
For a business to run effectively the following are needed or needs to be put in place:
BusinessàMarketingàSupply chainàLogisticsàProductionàApprovalàSells to customersàHuman ResourcesàExpansionàITàFinance
In other to capture transaction, the service of an accountant is needed.
Financial statements are:
- Balance sheet
- Income statement
- Cash flow statement
What then are financial statements?
Financial statements are the medium by which businesses transmit information about activities within the organization to interested parties outside the organization.
Users of these financial statements are:
- Management of the company
- Government & government agencies
Key concepts in accounting include:
Source documents, transactions, journal, account, chart of accounts, accounting system, ledger, posting, accounting cycle.
In depth explanation of the concepts stated above:
- Source Documents are where the transactions are captured/recorded e.g. invoices, receipts, bills, etc.
- Transaction is any event that has a financial impact on the business and can be measured reliably.
- Journal is the chronological accounting record of an entity’s transactions.
- Account is a unique record for each type of asset, liability, equity, revenue and expense.
- Chart of accounts is a complete listing of every account in accounting system.
- Accounting System is a system used to manage the income, expenses, and other financial activities of a business. The accounting system may be manual or automated.
- Ledger is a book that contains the accounts for the transactions of the business.
- Posting is the copying of amounts from the journal to the ledger.
- Accounting Cycle is the whole process from capturing information in source document to preparation of financials.