Second Thoughts

After re-reading the ACCT11059 Chapters 2 and 3 Study Guides, for the purpose of doing Assessment 1, I have come to doubt my way of looking at annual reports.

I accidentally wrote my ideas, reactions and reflections on sections 3.3 and 3.4, because I didn’t read the assessment instructions properly. Oops! I didn’t submit them though.

Over the final days of doing Assessment 1, I have had second thoughts and new doubts.

I said in my blog post What I look at in an Annual Report that I categorise what I look at into primary important and secondary important. I now think that perhaps I should not be doing this. My secondary important areas were:

the company’s purpose, normal business activities, direction, present key challenges, future strategy, plans and projects, and its present identified risks and capital commitments.

I feel that by making these areas ‘secondary’, I may be missing out on being able to really connect to the economic and business realities of a firm. Perhaps I need to stop separating these elements, being the financial from the general business information, and start to look at them together more closely, in order to see a better picture. Perhaps I need to stop looking at the mere numbers and thinking I see ‘the answers’ and start to have more of a concern for the actual business with its interconnected realities.

After my second reading of the study guides, I started to doubt my own selective ways of analysing financial statements. I begun to question myself if I really am looking for the right things. I came to the conclusion that while I read and look at the finances well and can accurately comment on them, I think I may be neglecting the economic and business realities and what future value they might add. I put this down to a lack of education in this area.

The last 2 paragraphs of the sub-section called ‘Just do what ‘works’’ (3.3.2) had a big impact on me. I have great faith in the judgments made by the author, Dr Martin Turner, in the text. He is extremely educated, a doctor of accounting, and someone who I esteem and trust. He has obviously done the research and is simply commenting on the findings. He concludes that we can only “gain a lot of practical wisdom and ‘good sense’ from experienced practitioners, particularly if they combine their experience with the ability to explain and communicate their insights well.” I found the named recommended writings of Benjamin Graham, David Dodd and Warren Buffett valuable, as these men actually have the ability to use financial statements to gain insights into the economic and business realities of a firm.

I had continued doubts while reading section 3.4, about seeking to determine the value of equity based on future expected cash flow relating to the dividends.

In conclusion:

I feel that I have actually learnt something very special when contrasting the thoughts of the text with my own established understanding and way of analysing. And all brought about because of my mistake in not properly reading the assessment instructions. I’m now looking forward to learning how to truly understand and connect to the economic and business realities of a firm and how to see if they will bring any future value.

I understand that learning must connect with our prior knowledge and experiences, even if it means overturning long-held views and foundations. Sometimes we have to challenge our current views in light of better understandings. Sometimes we have to ‘unlearn’ things in order to learn new things. I also know we need other people to assist in our learning journey because different judgments will contribute to how we see things in reality. Therefore, I hope this blog post will be of good help to my readers, in contributing to their learning journey in studying accounting.

Well, I still have a lot to learn. Nevertheless, I’m loving my journey!



WARNING: Take care with the Balance Sheet

Hello to all of my dear Peers and Readers,

Today, I am working on my spreadsheet, Step 4. And I have just realised something very important, particularly when it comes to how I am giving people feedback.

Your Balance Sheet needs to have the words “as at” and not something like “years ended”.

Some people have got this wrong already. Balance Sheets are indeed like this. Other financial statements are not.

Click here to see Dr Turner’s video if you are still in doubt or need some extra assistance.

Also, just be careful about the $ ‘000 part, i.e. the column headings. For example, if a figure shows $1,000,000 then you would put 1,000 in a cell using the $ ‘000 heading. If you removed that heading to just a $ sign heading then you would put 1,000,000 in a cell.

Please be careful everyone, in your own work and in your feedback which you give.

And may we all get great marks and grades in this ACCT11059 Unit.

Kind regards, Evan Spurway


What I look at in an Annual Report

When I look at an Annual Report with the Financial Statements, I am most interested in the following things. These are the top things that I look for with a quick look, not a thorough look.

1.  Total Net Assets, and then Current Assets over Current Liabilities

What I want to really know is: Can the company pay its debts as and when they fall due?

This concept is called ‘solvency’. It is illegal to continue to do business in Australia if a company is insolvent, not being able to pay their debts as and when they fall due, see Sections 95A and 588G of the Corporations Act 2001 (Cth). So this is what Boards and Management of companies think about and look at as a top priority. And this is what I look for as a big thing as well.

I find the liquidity ratio of the ‘current ratio’ (that is, current assets over current liabilities), using a measure of 2:1, a useful ratio to give me an indication if things are OK or not.

Current Assets & Liabilities – Value realised within 12 months.

Non-Current Assets & Liabilities – Value realised beyond 12 months.

However. I must confess that the first thing I look at before the current assets and liabilities is the total net assets. I just look at this central total on the Balance Sheet first. Why? Because it’s the main total! This is actually how much the company is worth (total net assets [A = L + E] = net company worth), after all the debts (liabilities) have been paid. If you were to buy the company, this is would one of the figures you would be interested in.

2.  Net Operating Cash Flow

I find the other cash flow information on the Statement of Cash Flows secondary to this figure. I want to know if the normal business activities of a company are actually any money. In other words, is the company making or losing money as a result of its normal business activities.

This is different from the Profit/Loss result found on the Income Statement, because under accrual accounting the Income Statement takes into account some income and expenses yet to be realised. It also includes some non-cash transactions as well, e.g. depreciation expenses.

Confused? Suppose a business made a $1,000 profit. That might not be of any good news if they did not get the actual physical money to be able to pay for next month’s due bills.

So in terms of bringing in the cash, for the overall continual running of the business, I believe this figure gives a more pure result and understanding on whether the normal business activities are really benefiting the company or not.

I mean seriously: How on earth can one survive if their normal business activities just don’t make any money?

3.  Net Profit or Loss Result

This figure is important to me too. This time, I want to know if the company’s revenue (not the standalone immediate cash inflow from the operating activities) is covering the company’s expenses. The end result of the Income Statement, being a Profit or Loss, will eventually be added to the Equity total on the Balance Statement.

If there is a Profit then the Total Net Assets will increase, value has been created.

If there is a Loss then the Total Net Assets will decrease, value has been destroyed.

It is important that company’s make a Profit. If they don’t, in time they could loss their ability to pay their debts as and when they fall due. Assets are supposed to be used to make money, as a ‘Return on Investment’ for the owners of the equity.

I find usually a company that has a lot of debt is able to make higher profits. This is because the money from the debt/s is invested into assets that make more money for the company. This is called ‘gearing’.

4.  Dividends to be Paid

Another important thing I look for is what kind of dividend will be paid if I invest in the company. What will be my return on my investment? Is an investment here worth something?

In the ACCT11059 Unit, we are actually looking at these companies as outsiders, not insiders. We are looking at what a potential investor sees and should know, according to Dr Turner in Study Guide 2, Section 2.1: “We will also focus on equity investors as one of the groups of people with a genuine interest in using financial statements to better understand the economic and business realities of firms.”

Other Important Information:

I find other information, though important, secondary. Nevertheless, I will pay still pay careful attention to the company’s purpose, normal business activities, direction, present key challenges, future strategy, plans and projects, and its present identified risks and capital commitments.


Here’s the other stuff for today…

My Key Concepts and Questions:

Basic and Diluted Loss per Share

I have no idea what this is. Therefore, I cannot write a key concept definition.

My question is: What is it?

Basic Loss per Share

This is the net loss divided by the weighted-average number of outstanding common stock shares (Sangamo Therapeutics, Inc., 2015, para. 1).

How do we calculate this for ourselves?

Diluted Loss per Share

This is the net loss divided by the weighted-average number of outstanding common stock shares and potential dilutive securities (Sangamo Therapeutics, Inc., 2015, para. 1).

How do we calculate this for ourselves? What are potential dilutive securities? How can we tell or identify what they are?

Treasury Shares

This accounting item is for the recording of the buyback of shares from shareholders. These shares then belong to the company and not the shareholders. It is a Balance Sheet account with a Debit balance, which goes under Equity.

I have no questions for this one.

Equity-Settled Benefit

This accounting item is for the recording of transaction where “goods or services are received or acquired in a share-based payment transaction when it obtains the goods or as the services are received” (Pitcher Partners, 2014, Equity-settled Share-based Payment Transactions, para. 1). It is a Balance Sheet account with a Credit balance, which goes under Equity.

How do we calculate this for ourselves?


What similarities or differences are there between your firm and the firms of other people and in the way they present their financial statements?

Christine Smith’s company was Fleetwood Corporation.

Similarities: Formatting

Differences: More details on Share Based Payments and information on something called a Deed of Cross Guarantee

Leesa Lesmeister’s company was Allegra Orthopaedics.

Similarities: Highlights the risks in using their financial instruments, along with formatting

Differences: Has its own one page Financial Report for 30 June 2017 in the Annual Report, and the finances has its very own Contents Page

Emily Smith’s company was Aeris Environmental.

Similarities: Highlights the risks in using their financial instruments, along with formatting

Differences: Has its own Review of Operations and Commentary (one page each) in the Annual Report, the Notes to the Consolidated Financial Statements has its very own Contents Page, and there is additional ASX information at the back of the Annual Report


Are you happy with the firm you have been given, or would you have preferred to be given a different company?

Yes, I happy with my firm, but I would have preferred a firm that was in a better financial position.


What concerns, if any, do you have at this stage?



Has discussing with others helped in you understanding more about what your firm does and about aspects of its business performance?

Not in a big way. Reading Leesa’s work about why companies might borrow to pay dividends was really good for me though.


How has Peerwise helped?

Peerwise has certainly helped reinforce what I have read in the Unit Study Guides. I am better learning the Key Concepts there. Sadly, this has been most effective when I get questions wrong!


How was Studiosity support?

Didn’t get back to me as of Friday afternoon (23/03/2017). But they are really nice people. I would use them again I think.


My Top 3 Blogs

(not in any order)

(if you didn’t make my list it is because I could only have 3 maximum!!)

Christine Smith

A Late Boomer

This blog looks amazing! And it keeps getting better and better and better. All of the pictures are fantastic. Her blog is neat and organised. The work is quality. She speaks very well. She also interacts very well.


Leesa Lesmeister

Leesa’s Blog

This blog is great! Lot of work done here. Leesa’s work makes for good reading. She is progressing very well in her accounting journey. She is on the ball. She researches. She engages and provides good comments. Also, she has a good sense of humour and has some nice pictures on her blog.


Emily Smith

An Accounting Journey

This blog absolutely blew me away when I first visited it! It looks fantastic! Her main picture up top is stunning. Her other pictures are look great also. Emily is a very intelligent person, who writes well. Her work is a delight to read. She is thoughtful, thorough and asks the right questions.



Sangamo Therapeutics, Inc. (2015). Quarterly report pursuant to Section 13 or 15(d) for 3 months ended 31 March 2015, Notes to Financial Statements, Note 4 – Basic and Diluted Net Loss Per Share. Retrieved from

Pitcher Partners. (2014). Accounting for share-based payments. Retrieved from


Greatcell Solar Limited

Greatcell Solar is a company listed on the ASX. It was originally listed in July 2005. It changed its name from Dyesol Limited (DYE) to Greatcell Solar Limited (GSL) in 2017.

Working within the renewable energy sector, it seeks to lead for the rapidly emerging third generation solar photovoltaic (PV) technology and the perovskite solar cell (PSC) technology through development and commercialisation activities.


Figure 1. GSL Logo. From Greatcell Solar Limited Annual Report 2017, by Greatcell Solar Limited, 2017 (

Company Structure:Capture1

Figure 2. Company Structure of GSL. From Greatcell Solar Limited Annual Report 2017, by Greatcell Solar Limited, 2017 (

GSL has 58 employees that are predominantly located within Australia, with others operating from the United Kingdom, the Netherlands, Belgium, Switzerland, Korea and Italy.

About the Industry Area:

The renewable energy sector in Australia has organisations resourcing and supplying electricity generation by means of renewable energy resources. The sector includes rooftop solar, large scale solar, wind, bioenergy and hydro types of electricity.

About the Key Challenges:

GSL is struggling financially.


Nevertheless, GSL is confident of the income of PSC technology commercialisation. It is determined to bring value to shareholders through the money from the intellectual property that has already been created.

To address the issue of extra finances, in 2017/2018, they will seek to get extra partners to help provide the business infrastructure and much of the capital required for success. They will also look to the Australian Government for help.

So far to date, it seems like GSL is gathering together a number of collaborators that will help achieve their goals.

Although, unfortunately, on 9 March 2018, GSL went into voluntary suspension of shares on the ASX. It last traded at $0.17 per share.

GSL Resource Links:

GSL Monthly Blog: Q&A of the Month

GSL Company Overview Video (03:55 mins)

Recent News Articles about GSL:

(2017-09-21) Freshly Rebranded GSL Charges into Commercialisation Phase

(2017-11-23) Greatcell claims a world record for its third-generation solar cells

(2017-11-23) Greatcell Solar receives $4m investment

(2017-12-12) $6 Million ARENA Grant – Funding Agreement Signed

(2018-03-09) Greatcell battle to raise funds after voluntary suspension of shares


Renewable Energy Sector Resource Links:

Renewable Energy World – The World’s #1 Renewable Energy Network for News, Information, and Companies

Renewable Energy Sector News Articles:

(2017-08-25) Renewable Energy Index shows power of solar, wind, hydro and other renewables



They sent me this really nice message at 14:24 PM earlier this afternoon:

Hi Evan,

Thank you so much for patiently waiting for your document to be reviewed. There has been an unexpected surge in submissions to our service which, unfortunately, has caused delays, so your file “Evan_Spurway_12081634_-_ACCT11059_-_Assessment_1_Step_3.docx” is still in the queue.

Don’t worry – we’re going to get it back to you as soon as humanly possible.

Our sincere apologies for this delay and any stress caused as a result of it. 🌷 We’re working really hard, around the clock, to make sure you get the help you’re looking for.

Best wishes,
The Studiosity Support Team


I’m not worried. They try their best and keep you in the know. They’re good, and I think I can already say that I would use them again.


Click here to see the 2017 GSL Annual Report.


More Building-Blocks

Hi Everyone.

I was shocked not to read about ‘source documents’ in Chapter 1 of our ACCT11059 unit. Source documents are the documentary evidence behind all transactions entered into the accounts. They are the building-blocks of the journals and ledgers (the building-blocks of the building-blocks).

Upon further reflection, I then realised that we are not training at university to be bookkeepers or accounts clerks. We are training to be accountants or at least serious accounting professionals. Usually, you cannot be one of these without a degree.

I know not everyone doing this unit is looking to target accounting related employment. However, I thought this blog post might be helpful for all – to contribute to learning and understanding. The document found below is for one to learn about source documents and the different kinds of accounting journals. Although, perhaps a bit out-of-date now, it may still help to understand how business transactions make it from the time of happening into the accounts. This information may or may not be covered later on in this unit. I hope this helps!

Usually, ‘the accounting process’ goes like this:

Business event and transaction = a source document

1.  Record from source documents to the journals

2.  Record from the journals to the ledgers

3.  Record from the ledgers to the trial balance

4.  Record from the trial balance to the financial statements

Source Documents and Accounting Journals, written by Evan Spurway