Team Reflection

Learning Team Week 1: Reflection Summary

There were four main learning objectives for week one that related to accounting and business. The four objectives were to identify basic financial statements, understand the rules of debit and credit, journalize transactions, and post transactions from journals to ledgers. To meet these objectives it is critical to have a firm understanding of the accounting system, which is collecting, processing, and documenting of data.

The first chapter focused on financial statements; however, the ability to correctly create financial statements begins with the ability to record business transactions. Accurately recording business transactions begins with journal entries. The journal is the initial accounting record of transaction that provides a chronological record of transactions and can help to prevent errors. Documenting all transactions in a journal is essential to move transactions into a ledger and then into a trial balance. Financial statements are then made using all of these records.

In order for journals, ledger, and trial balances to be accurate it is critical to understand debit and credits. This can be confusing because it does not align with what an average person equates to debit and credit in everyday economic transactions. It is vital to remember that every transaction has two effects, and those effects are either a debit or a credit. A debit will increase assets and decrease liabilities, whereas a credit will decrease assets and increase liabilities. When looking at assets debits should exceed credits and for liability credit should exceed credits.

Journals, ledgers, trial balances, debits, and credits are used to built a business's financial statement There are four types of financial statements discussed in class to include income statements, retained earning statements, balance sheets, and statements of cash flow. They all serve separate but related purposes as learned in class. The income statement reports revenues and expenses and is linked to the retained earning statement. The retained earning statement determines the stockholders equity and indicates why. By subtracting the net income from the dividends you get the stockholders equity. The balance sheet reports assets, liabilities, and stockholder's equity at a certain period. To create the balance the balances from the retained earning statement are used. When completing a balance sheet an important thing to remember is that the assets much equal the total liabilities. The statement of cash follow shows how cash is moving through the company. It helps to answer question on the companies operating, investing, and financing activities.

Not only do financial statements support each other, but they also provide useful information it internal and external customers. Internal customers, such as managers use financial statements to plan, organize, and run businesses.