Management Reflection - week 2

So here we go again, although I havent received my marks back for the first reflection, I thought this blogging technique turned out quite well so I'm going to try sticking to it.

Last week we learned some basic concepts of financial accounting and documents which are essential to all businesses. I learned quite a few terms which can be seen often in everyday life, eg asset, revenue. I think it is important to know all these business terminologies because we will definately have contact with it in the future.

We then moved on to the core equation of accounting (Assets = Liabilities + Owner's Equity) and working capital. The whole concept of a working capital really opened my mind to businesses. I always thought that as long as you get sales, your business can keep going. I have never thought about the money that was required in the middle of the process; the gap between getting your sales and producing your goods. As the lecturer put it, like oil in an engine, without the working capital, a business will run "dry".

The documents which are essential to any business are the statement of financial position and the statement of financial performance. The more I learned about these documents, I realised that a lot of details had been put in them. It made sense because if you do not monitor your business properly and accurately, there is no way to determine which path your business should take in the future.