Reflective Journal on Accounting Topics - Desklib

This reflective journal covers various accounting topics such as double entry accounting, sales and purchases, accounting for inventory, and cash management. It also discusses the importance of inventory accounting and cash management in business liquidity.

Reflective journal
In this course, I had learned various accounts related topics explanations for my leaning
regarding each topic is given below,
These courses teach me about the presentation an preparation of the financial statements as per
the accounting standard’s framework. It also helps me implementation o various accounting
standards and guidelines issued by accounting stand board of Australia.
Double entry accounting: In this week I learned regarding the double entry bookkeeping. This
makes me eligible to understand the primary financial information basis for an organization i.e.
statement of financial position, performance and equity changes. It also makes me clear how the
basic accounting equation works i.e. addition of liabilities and equity always equal to total assets
of the organization. This accounting equation works behind the double entry bookkeeping
system. It also explains the process of conversion of a transaction recorded in the journal entry
format to its representation by the financial statement. In addition to this three rules that work
behind the initial recording of every transaction is also learned by me in this week. It makes me
understand that every asset increase, liability decrease and occurrence of expenses should be
debited, on the other hand, every asset decrease, liability increase and occurrence of income
should be credited. After the journal entry recording, this week also helped in learning the ledger
posting(Deegan 2016). The general ledger is a collection of all ledger accounts in the order of
their account number. Such accounts are expected to show on the balance sheet in the same order
in which those are presented in the general ledger. All account balances from the trial balances
transfer to the respective financial statement. Leanings of this week was about the bookkeeping
i.e. primary recoding of the transaction by journal entry, then posing of such transaction to ledger
accounts and then preparing of trial balance by using all accounts balances and at last making
financial statements by using adjusted trial balance figures.
Sales and purchases: This week makes me able understand that major objective for recording all
transactions is profit determination. As per the GST regulations, every retail organization having
sales revenue more than $75000 must have ABN and required to register for GST. GST
registration results in getting and claiming input tax credit on purchases. It also required
producing a tax invoice for sale above than $75. Tax invoice required to have ABN number,
date, supplier’s name and other descriptions. Sale and purchase transaction having GST impact
must record GST as well in the journal entry. In sale transactions, GST payable account requires
to credit and in purchase transactions GST receivable account required to debit. In addition to
this GST amount also affected by the return transactions and credit debit note also required
issuing on return transactions. In sales return transaction GST payable account debited which
results in a reduction in liability regarding the GST payment. Additionally, in purchase return
transaction GST receivable account credited which results in a reduction in input tax credit
regarding the GST payment.

Moreover, Sale and purchase transaction not only require to consider GST accounts, it also
requires to consider discounts, freight inward during purchases and other purchase-related
expenses(Clarke 2002).
Furthermore, this week helps me in understanding two inventory systems. The perpetual
inventory system, where the separate cost of goods sold account is prepared and all inventory
transactions recorded by updating inventory account. The periodic inventory system, where
purchase account prepared and inventory account updated only at the end of the period, i.e. by
making a trail balance adjusting entry at the closing date of the financial statement.
Accounting for inventory: this week helps in understanding why inventory accounting is highly
important from the perspective of the financial position as well as internal control system. It
makes me understand that stock-taking is required for closing inventory calculations in periodic
inventory system and for verifying accounting records and inventory system in the perpetual
inventory system(Barwa 2015). Closing inventory includes goods on consignment and all cost
incurred on the raw material till the closing date. Closing inventory can be can be calculated by
choosing any out of LIFO, FIFO, average or specific identification method. Under LIFO method
last purchased inventory items are assumed as sold first. Under FIFO method first purchased
inventory items are assumed as sold first. Under average method inventory calculated on the
basis of average cost and under specific identification method inventory cost determined on the
basis of specific inventory item’s cost.
Moreover, this week taught us that every inventory calculation method has some attributes.
Specific identification method provides a loophole to make inventory manipulations. FIFO
method shows closing inventory at current price hence shows a correct profit(Virág & Fiáth
2010). The LIFO method shows inventory at older prices hence it makes balance sheet outdated.
This lecture also makes me capable of selecting the appropriate method for appropriate business.
Cash management: This was the most interesting and most tricky point for me. This lecture
makes me capable of cash controlling, understanding the importance of cash in business liquidity
and the reason behind various internal controls on cash management. This lecture taught me
various controls required imposing on cash transaction and cash balance. It also helps me in
learning the tricks of making bank reconciliation statement and finding reasons behind
differences between cash balance in the ledger account and cash balance as per bank passbook. It
also taught us cash budgeting is required for making a projection of future expected cash receipts
and cash payments. It also helps the organization planning for overdraft requirements or making
a big asset investment by the use of cash(Isaac n.d.).
This reflective journal concludes that I had enjoyed this course very much I got to know
regarding various accounting topics in a very practical manner. I am expecting to apply all
knowledge gained by me during this course in my workplace.

Works Cited
Barwa, TM 2015, 'Inventory Control as an Effective Decision-Making Model and
Implementations for Company’s Growth', International Journal of Economics, Finance and
Management Sciences, vol 3, no. 5, pp. 465-472.
Clarke, PJ 2002, Accounting Information for Managers, Cengage Learning EMEA, 2002.
Deegan, C 2016, Financial accounting, McGraw-Hill Education Australia.
Isaac, L, Budgeting Principles, viewed 17 April 2018,
<http://www.leoisaac.com/budget/bud013.htm>.
Virág, M & Fiáth, A 2010, Financial ratio analysis, AULA Kiadó.