The third week began with a class on Corporate Financial Accounting: Introduction to the Financial Statements. We dove deeper into the individual components of a financial statement (FS) and how they are generated, consolidating on lessons from the previous weeks.
The FS, which is a record of the financial activities and position of a business, provides a summary of the company’s financial performance over a period. In Nigeria, the FS is being regulated by the International Financial Reporting Standards (IFRS). Other countries like USA makes use of Generally Accepted Accounting Principles (GAAP) as their guide in preparing a FS.
While preparing financial statements, there are certain assumptions that one must consider viz:
Going Concern: A FS is prepared with the assumption that the company will continue to operate in the foreseeable future and will not liquidate or stop operations. This influences how assets and liabilities are recorded on the financial statement. However. Unexpected circumstances can occur forcing the company to liquidate.
Accrual Basis Assumption: Here, the financial transactions are recorded into the financial statement only when they are earned and not necessarily when cash is being received. For example, if a company is contracted to supply a product in a certain time in future, irrespective of if the cash is being paid as at the time of contractual agreement, the transaction will only be recorded on the FS when the said product is being delivered by the company. This assumption allows for a more accurate depiction of the accounting statement.
Matching Principles Assumption: This assumption presumes that expenses should only be recognized within the time of the revenues that they help generate. This gives a more accurate representation of the company’s profitability as expenses are matched with the corresponding revenues.
Armed with the above assumptions, the financial statement preparation is coming to life as we begin to describe some its features. As the classes on corporate financial accounting continues in future, more on the topic will be unraveled.
The week came to an end with a practical session on data analytics. The facilitator, Prof. Bongo, had selected some members of the class to handle the process. This was a fun session as I had been looking forward to it.
The session began with installation of the SQL software. SQL is an acronym for structured query language. This is software used both for data storage and its analysis. A brief theoretical part introducing the class to the software. Discourse on sources of data and types of data were addressed.
A key part of working with SQL is to differentiate relational database and from non-relational database. The relational database organizes data into tables that comprise of rows and columns. This database allows for efficient data storage, retrieval and management of data in a structured and organized manner. In contrast to non-relational databases, it is design to store large volume of unstructured or semi-structured data. It is used when the data cannot fit into tables.
The practical session on data analytics, while complex, provided valuable insights and laid a foundation for the future mastery of SQL and data management.
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