Maybe I should have studied for the ICAN.
I had that thought after I listened to 3 of my classmates, who are practicing accountants, debate an issue in Corporate Financial Accounting class. The debating wasn’t the problem. The problem was that I didn’t have the faintest clue what they were going on about. There was so much financial jargon flying around that I asked myself “who sent you to this place?” to which I also answered “you, dear.”
But this week in Corporate Financial Accounting(CFA) class, I didn’t question my choices nor reflect on them in despair. This week, I learnt a good number of financial terms which I’ve been informed will come in handy once I start dealing with actual numbers. Oh, the joy. That was sarcasm, but it has been quite fascinating learning about these terms, plus the fact that assets are actually recorded as a debit and a bunch of other stuff.
For example, when raising funds for one’s business it will come through in two forms. The first is equity and the second is debt. The equity is the funding that comes in as your personal investment, money that is rightfully yours. Debts on the other hand, are funds gotten through a loan or a similar method. Basically, a debt is money owed while equity is owed to no one.
I also learnt about the concept of “impairment of an asset”. Now picture this, you’re a farmer and you’ve bought a tractor for 12 million naira (I have no reference for this figure, a tractor might cost way more). This tractor is considered an asset due to the economic value it can bring to the business. Fast forward 3weeks with the tractor and you’ve decided to sell it. But then someone rams into it and dents it on the side. Now you cannot sell it for 12 million naira because it has that dent. That is an example of a case where “impairment of an asset” has occurred. Interesting stuff, no?
Still on assets, I also learnt that assets can be grouped into current and non-current assets. Current assets are assets you can convert into cash within 12 months while non-current assets will take longer than a year (12 months) before they can be converted to cash. An example of a current asset is a short-term investment and inventory, while an example of a non-current asset could be property or some form of machinery.
I’ve only just begun this journey into the world of CFA, so I’m bound to have moments where I get lost, I’m only just learning to swim in these financial waters. But I do know that in spite of the short moments of confusion, I’m learning a lot of valuable information that will prove to be invaluable as a business manager or owner. They already affect the way I look at my finances right now. My asset right now is my mind, and I am quite glad to note that it has not been impaired in any way.
Until my next round of learning, I bid you goodbye.
Problems; The key to a successful Business