Team Weekly Reflection 2

Topics: Generally Accepted Accounting Principles, Balance sheet, Annual report Pages: 5 (791 words) Published: November 28, 2014

Week 2 Reflections

Weekly Reflection
Week 2 Reflections
In our first week we learned the relationship between financial statements and the components of the annual report. These reports give you an overall look at the company and their financial information. The financial statement can be used by creditor, potential employees, possible investors, etc. to help them determine if they want to do business with the company. Collectively as a class, the discussion was very interesting, as we talked about the importance of different sections of the annual reports and which parties would be interested to read the information. We also discussed the importance of accuracy in the annual reports. If the information is found not credible it can ruin your company reputation, loose investors and employees or face a audit from Internal Revenue Service. It is a criminal offense with steep penalties if a company knowingly provides false information on their reports. Also we are in the process of learning how to prepare certain statements accurately with our practice assignments in this course. Debits go on the right, Credits on the left when doing T Accounts. Week 2 Reflections

In Week Two of our class, we covered a wide range of topics. I was intrigued by the expense recognition principle and the revenue recognition principle. Based on our textbook, Financial Accounting, Sixth Edition, it describes the expense recognition principle as “expenses matched with revenues in the period when efforts are expanded to generate revenues” (p.165). My understanding of this is whenever an organization has money going out or coming in, such as paying debts or receiving income, they should report the changes. The textbook goes on to further say about the revenue recognition principle, “revenue recognized in the accounting period in which it is earned” (p.165). Week 2 Reflections

In the first week of this class we learned about the different types of financial statements and reports, as well as, the importance of making sure those reports are filled out accurately. The accuracy of those reports is very important because the company producing false reports can be charged a fine and the business would surely take more hits after that because the public knows they cannot trust that company anymore. Where I work, we often borrow equipment from other people around us and it usually hand receipted because we need to keep track of all sensitive items; we make people sign for the equipment because we need to know how much they are borrowing and when they will give it back to us. If they sign for two items and only mark down one, they could essentially take the other piece of equipment. The accuracy of any financial statement is very important to the stability of the company. Week 2 Reflections

Accounting is a challenge as a whole; it is a good subject to learn because accounting knowledge is always in demand. So far, I am on a good path learning the basics of accounting. I have learned how accounting affects business and how it allows organizations to identify cash inflows and outflows. Without accounting there would be no way to accurately predict cash flows, or future operations. One of the most important things I learned is to remember accounting equation. "The accounting equation is the basis upon which the double entry accounting system is constructed. The accounting equation is: Assets = Liabilities + Shareholders' Equity. The assets in the accounting equation are the resources that a company has available for its use, such as cash, accounts receivable, fixed assets, and inventory." (Merritt, C) I can appreciate the importance of a financial statement knowing that it is a valuable tool for businesses, as it provides the financial information that investors and creditors use to determiner a company's financial performance. I also learned that financial statements vary, and focus on different areas of an organization’s...

References: Kimmel, P.D., Weygandt,J.J., & Kieso, D.E. (2011).  Financial accounting: Tools for business decision
making (6th ed.) Hoboken,NJ: John Wiley & Sons.
Merritt, C. "What is the role of the accounting equation" Retrieved
transactions-12632.html on November 2, 2014
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