Week 1 VCS Assignment
FIN 500: Financial & Accounting Skills for Managers
Komal Jiwatode
Westcliff University
Professor: Amarjit Singh
September 15th 2024
Week 1 VCS Assignment
In reviewing specific activities and situations requiring for writing entries in
journals, publishing them into general ledger accounts, and computing unexpected
amounts, my professor aims to investigate and apply accounting principles.
Knowing the process of accounting and ratios of finance and how they link to
business operations are the primary focus of the study.
The objective is to give an extensive understanding of how financial
accounting works and how activities appear in the financial statements. The role of
accounting for management is also taken under thought, with an emphasis on how
accounting information influences managerial choices (Horngren, Harrison, Oliver,
Best, Fraser & Tan 2012).
The topics talked about, which draw from the lesson discussions in Week 1,
emphasize the value of management and financial accounting in the equation for
accounting, the planning of journal entries, and the importance of the ratio of debt to
revenue. These concepts are used in exercises that replicate real-life scenarios in
order to strengthen the fundamental understanding of accounting processes.
Main Class Content Review
I examine basic principles of accounting in this course, especially the equation
for accounting and how it's utilized to record transactions. I studied how the
accounting system gives reliable and precise financial information to stakeholders
like investors, debt holders, suppliers, and tax authorities according to what was
presented in Week 1 of class. Before the accounting records are finalized, records
containing every business transaction are uploaded to the ledger accounts and
presented as trial balances.
Transactions analytics and record-keeping preparation: I must post the money
into T-accounts after evaluating a number of activities for Elegant Lawns. Cash
expenditures, cash purchases, cash paid for offerings, and cash given beforehand
for future services have all been covered within these entries. The main objective is
to keep accurate book records whilst correctly applying the accounting equation,
which read assets = liabilities + equity, to various activities (Ross, Westerfield &
Jordan, 2021).
Looking at Balances and Accounting Entries: In this exercise, situations
involving balances of cash, receivables, and payables are laid out without requisite
financial data. It is our responsibility to figure out the unidentified amounts by
examining the accounting data that has been provided for the Alameda business,
Corentine Co., and Valerian Co. In order to obtain the required numerals, this
procedure urges us to apply financial logic and analysis of financial statements.
The significance of understanding financial ratios particularly the debt ratio
was also emphasized in the first week's lesson materials. Accounting ratios are a
helpful instrument for understanding and summarizing complex financial data. A debt
ratio can be utilized to assess the financial danger of a company. It is computed by
multiplying the total debts by the total value of assets. Lower ratios could indicate to
unoccupied leverage, while excessive ratios may point towards an excessively
burdened the company.
Response to Professor ‘s Questions
What is the importance of comparing financial ratios, like the debt ratio, across
different companies and industries?
The value of accounting ratios, such as the ratio of debt, lies in their ability to
offer an identical indicator of the economic condition across various companies and
industries. A business's debt ratio could offer insight into how well it handles its debt
relative to its rivals by being compared with the rest of the industry.
Since the business relies more on loans to finance its activities, a higher debt
ratio may be a sign of increased risk to its finances. This may make the business
less attractive to investors and creditors, who might view it as a risky enterprise. On
the contrary hand, a lower ratio of debt can point to a cautious finance strategy than
lowers risk to the economy but may restrict growth options (White, Sondhi & Fried,
2002).
Future Uses
Both financial and managerial accounting rely heavily upon the ideas utilized
in the present endeavour. For any accountancy specialist, understanding how to
precisely document transactions and produce accounting records is important. In
addition, making wise choices concerning expenditures, handling risks, and business
strategy needs the ability to assess and comprehend ratios of finance like the ratio of
debt (Libby, Bloomfield & Nelson, 2002).
These skills will be particularly beneficial in the future for:
Financial Evaluation: Evaluating the success of a business and financial condition is
made easier by understanding how to create and assess financial records and ratios.
Managerial Decision Making: Using this information, employees will be able to
decide which way to divide assets, create spending plans, and create plans.
Risk Management: By determining and contrasting ratios of finances, firms may
assess financial risks and alter their approaches in order to minimize them.
Conclusion:
It has provided me an opportunity to use basic accounting principles in an everyday
context. I reiterated the basic concepts of reporting on finances and the tax equation
by creating journal entries and computing unexpected financial figures. In addition,
the emphasis on finance ratios in particular, the debt to revenue ratio emphasized
the importance these indicators are for assessing the financial health of an
organization and comparing it with standard practices in the industry. These ideas
will stay the basis for more complicated evaluation and choice-making as I continue
with our financial study.
References:
Horngren, C., Harrison, W., Oliver, S., Best, P., Fraser, D., & Tan, R.
(2012). Financial accounting. Pearson Higher Education AU.
Libby, R., Bloomfield, R., & Nelson, M. W. (2002). Experimental research in financial
accounting. Accounting, organizations and society, 27(8), 775-810.
Ross, S. A., Westerfield, R. W., & Jordan, R. D. (2021). Fundamentals of corporate
finance (13th ed.). McGraw-Hill
White, G. I., Sondhi, A. C., & Fried, D. (2002). The analysis and use of financial
statements. John Wiley & Sons.
