Also, please include your thoughts and key concepts and questions that occur to you as you complete this process. What insights have you gained from completing the recording process of your own personal transactions? Will this be something that you continue and expand upon in future (for example, create your own Balance Sheet)? Please also describe your responses to the following questions:
a) What is the chart of accounts so far, as illustrated in this example? What is your own chart of accounts? Is it like the one shown here? Remember, you can add to your chart of accounts as you classify more of your own transactions.
b) What level of detail could you change in the chart of accounts shown in this activity? Why might you want to do this?
c) How might you analyse your Income Statement? Has this exercise of recording your transactions through to the financial statements been useful for you? If so, why; if not, why not? Please allow up to about 5 hours to complete Step 4. Step 5: (6 marks) Step 5 involves you creating a Trial Balance in a spreadsheet, using your company’s financial statements. Please read Chapter 3 (pages 87; 105-107) from Hoggett et al (2015) (the textbook for our unit) to help you to complete this Step. You can find a template Trial Balance spreadsheet by clicking on ‘Template Spreadsheet’ link in the top centre box on Moodle. A Trial Balance is one form of control used for the double-entry recording process; that is, to see if ‘debits match your credits’.
A trial balance is simply a listing of the chart of accounts of an entity in terms of debits and credits (DR and CR). It is a ‘trial’ of whether these ‘balances’ match (hence the name). It is also a convenient list of a firm’s ledger balances that can be used to develop a firm’s financial statements. We will be looking at the Trial Balance ‘in reverse’. In this step, you will create your firm’s Trial Balance using your firm’s financial statements. The two main financial statements you will be using to complete your Trial Balance are the Income Statement and the Balance Sheet. You may also need to refer to the Statement of Changes in Equity when checking that the profit/loss allocated to the equity section matches your firm’s revenue less expenses. You will not need to use the Statement of Cash Flow for this step.
Open your firm’s Trial Balance worksheet by clicking on the Trial Balance tab in your template spreadsheet. You will find in this worksheet some space for you to enter your firm’s Trial Balance. Carefully enter each of the accounts from the most recent year of your company’s ACCT11081 Introductory Financial Accounting – Assignment Page 8 of 16 Income Statement and Balance Sheet, either under the DR or CR columns. Do this for the most recent year only. Enter your Trial Balance accounts in the order of Assets, Liabilities, Equity, Revenue and Expenses. Once you have successfully completed your Trial Balance, your DR and CR column total figures should be the same (i.e. ‘balance’). Tip: Your firm’s financial statements may be called a range of different names, such as Consolidated Statement of Financial Position (which is your firm’s Balance Sheet) and Consolidated Statement of Financial Performance (which is your firm’s Income Statement). Tip: We use our firm’s consolidated or group accounts; not its parent or company accounts. Sit back and reflect on what you have just completed.
Discuss with others, perhaps face-to-face (f2f), through our blogs, our unit Facebook page, Moodle forums or email, about what you have learnt by doing a Trial Balance for your firm. Also, discuss with others about how your firm’s financial statements link together. In your Word document, include your reflections and your comments about what you gained (or did not gain) from your discussions with others. Please allow up to about 5 hours to complete Step 5. Step 6 (2 marks) Step 6 involves you providing (and receiving) feedback to three other students in our unit on their draft ASS Steps 3-5. The main benefit for you of Step 6 is in giving quality and thoughtful feedback to others in our unit. The process of thinking about the feedback you give to others will help you greatly with your own assignment as you think about what the assignment requires and how others have addressed these requirements for their own companies.
Prior to 5.00pm Friday 4 August 2017 (Week 4), please:
• post draft work of your ASS Steps 3-5 on your blog;
• provide a link to your blog on the Draft ASS Steps 3-5 Feedback Forum and post in the Draft ASS Steps 3-5 Feedback forum a comment that your draft ASS Steps 3-5 is ready for student feedback and, if you wish, specific areas where you would particularly value feedback for your ASS Steps 3-5.
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