Tuesday, January 25, 2011

Accounting is an Accrual Profession

You can't talk about bean without hearing the word accrual. Sorry for the bad pun (couldn't resist).

In accounting, the bean counters try to make information forward-looking and incorporate into the financials all of a company's assets and liabilities.

Often this forward-looking concept is achieved through someone's best guess because they have only past experience or incomplete information. So when you hear the word accrual often the word best guess comes to my mind.

We'll explore this more, but for now, just think accrual = best guess.

Sunday, January 23, 2011

An accrual Idea

So accounting is simple--well, or should be simple. Like all things, it is often muddled with overly-complex words and veiled concepts to obscure one thing--the truth. That's another discussion.

But as long as you know the fundamental underpinnings, the rest is just fluff. So what you may ask is that?

Here it is: Accounting helps you know what resources to use in the future (balance sheet), how you've been doing for a certain period of time (income statement), and where all our money has been going/coming from (cash flows).

Simple enough. Let's not be intimidated by all the big words (often a compensating mechanism) and information overload.

We'll explore bean counting and discover it's actually pretty useful (dare I say--cool).

Tuesday, January 4, 2011

Becoming a Profit

Just need to jot the idea down:

Have you ever wondered how a business moves from costing its owners money to creating value for its owners? Well maybe not, but I have (NERD). So the next installment in the blog series will be Becoming a Profit: The Journey of the Profitable Business.

More to come....