Assignment 1 Step 5 - KCQs Derived from Study Guide 2 & 3

KCQs Derived from Study Guide 2

KCQ 1 - “To play the game, you have to learn the rules”.

To me, this is such a strong opening introduction sentence! My mind instantly raced with a couple of questions like “Well what knowledge of these rules is effective for a business?”, “What would make accounting so competitive that this mindset has been adopted?”. Although I knew the questions would later be answered, I was so intrigued to learn more about how accounting is integrated with this concept. Looking at this term broader than the accounting world, I reminisced on day-to-day activities that when you know the rules, then you can really play the game.

KCQ 2 – “Although the accounting standards are legally binding for companies… Only those companies (and other entities, such as sole traders, partnerships, trusts and government entities) that prepare and issue general purpose financial statements need to comply with all these accounting rules.”

After reading these separate sentences I was generally confused. Is there a grey area in accounting that covers businesses, outside of sole traders, partnerships, trusts and government entities, that do not issue general-purpose financial statements despite these accounting standards being legally binding? I also became confused when the study guide explained that any firm can decide to produce and issue general-purpose financial statements but must comply with these rules. Now reading this you’re probably thinking ‘if you look at the snippets like this then I see why you’re confused’ or ‘I don’t see why you’re confused the answer is right there. But to me, I took this as, there are rules in place that every firm must follow, however not all businesses follow these rules and that is ok, but if they want to publish these general-purpose financial statements all rules must be obliged.

KCQ 3 – “We need each other to help us get to know our own firm better.”

This has been a big part of completing assignment 1 for me this term! I have been able to connect with students on different university and social media platforms to discuss my own company as well as theirs! Not only the posts added to everyone’s blogs introducing their company but also the way they view it with their prior knowledge and how open they are to receiving different perspectives. ACTT11059 has been an eye-opener to the change in education that can be provided. A class that allows students to engage with each other and learning to learn with the support of their peers. I have been able to get coffee with another classmate, facetime other distant learners and reach out for needed support when being stuck on a question. Primarily because this class did teach us that we do need each other and that other’s knowledge can be of wealth to you.

KCQs Derived from Study Guide 3.1

KCQ 1 – “How could we possibly use these financial statements to engage and connect to what is really going on in our firm?”

When I read this I had a big sigh of relief! Thank goodness the teachers still understand what it’s like from day dot and are taking the time to not only provide relevant resources but also relate to this first-term jitters of accounting. These were my exact thoughts, but that was just for me… were any of my classmates feeling the same? Or am I not understanding the content correctly?

KCQ 2 – “A firm’s balance sheet shows its financial position on a day; that’s right, on just one day”.

One day! My company has a list bigger than Ben-Hur in its subsections of operations. How can all of the company assets, liabilities and equity be written from one day? After some deep digging, I found it can. My company also used the title ‘Statement of Financial Position’ instead of ‘Balance Sheet’. A quick definition of both helps to understand that these different titles mean the same thing. However, if there is already a distinct meaning for the balance sheet, why would an entirely different term be used? Could there be something the company was unhappy with and that’s why they decided to use a different term? Or is it because annual reports are a marketing tool and EVT wanted to appear ‘different’?

KCQs Derived from Study Guide 3.2

KCQ 1 – “A firm is forever dancing with others”.

When recalling from study guide 1 and walking around my local area to familiarise myself with the small businesses.  And how I asked myself, how can so many different businesses exchange value with each other? We have now learnt it extends to more than when exchanging that value adds value to the business’ equity investors. The metaphor that a firm is forever dancing with others because once we dissect it, it becomes more and more true! Movements could go so smoothly, everything could be in sync, if another stood on the foot of another it could be the start of the end or the other could recover nicely.

KCQ 2 – “There is no requirement on firms to disclose most of their expenses, so they usually do not”.

If a firm does not have to disclose its expenses, then how many of my company’s expenses were not included in my firm’s income expenses? What about these expenses makes the firm feel as though they shouldn’t share them, especially with their investors? After reading this, I feel as though it should be an obligation for firms to share this information. How are annual reports true if there are factors that are not reported?

If EVT is as customer-focused as they say they are then and potentially did not document all relevant expenses, how does this affect investors? Do firms blindside their investors for the financial benefit of the company? I think this is such an interesting take on this key question derived from this question because I feel as though this could be a possibility and if not for my company, then definitely for others.