"Watch out for accountants! They multiply!"
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1. Master spreadsheet skills. These assignments seem to pop up forever: 1/ depreciation (try to maintain and update a depreciation spreadsheet account for your own home equipments like kitchen aid machines or home improvement tools. Imagine you bought everything brand-new and make your spreadsheet ready to give you the value as of any date of the asset, individually and pool-wise, its accumulated depreciation, as well as the flexibility for new additions or disposals), 2/ monthly, quarterly, yearly updates (by that I mean you may want to try to maintain a spreadsheet account of your cash (asset), your home food inventory (asset), car loan (liability), and your food expenses (income statement temporary account). You'll have to figure out how to link them, update them automatically by month, quarter and year. Try to put yourself in the controller's shoes and ask a series of questions about each of the account balances as of a certain date and see if your spreadsheet can give you the information instantly. How to make information one month, quarter, and year roll over the next without losing track of the originals is not easy to grasp without some hands-on practice!).
2. Master database skills and arm yourself with webpage design knowledge. In today's competitive job markets, it is impossible to know too much about computers. You might think that an accounting job has nothing to do with webpages and the like. Then, you are wrong. An accounting department may have to maintain a webpage of its own. Since only a handful of accountants or accounting clerks know how to handle that job, you will be in a spotlight if you show you can do that. (This gap might be closed soon. Watch out!) As for databases, they are always needed. Unless you are the boss and can delegate the job of collecting, storing and retrieving data to your subordinates, you'd better know how to do that. Simply because your boss does not want to do that - either he is lazy, he does not know how to or he is in the position to make financial/operational decisions based on your database reports, not to create them). If you are at ease with databases, your life as a junior accountant will be less stressful.
3. Always watch out for the date: whether you are preparing or are looking at an invoice, a general ledger for some account, a journal entry or an income statement, cast your first look at the date. It can flash you about a lot of things before you begin digging to do what you are supposed to do. Without doing first things first, you might end up, entering an August journal entry--say an accrual for income earned but not yet received--in the month of September. The trap for this is simple. The accounting books never get closed until the new calendar month has kicked in, at which time your accounting system screen may show a current date while you are still in the previous month in all accounting senses.
4. Here're three rules for job security from David Burse, a colleague of mine: <A> Don't disturb the setting hens, <B> Stay out of the field where the bull is, and <C> Watch where you step. Not until I violated his wisdom, did I find it truthful. So think about them yourself and email me your position on this or your own philosophy.
5. Most accounting books are not 100% correct: This may sound funny, but that is the truth few accounting bosses admit. There are two reasons for this. First, the first set of books were created so long ago that no subsequent accountants know for sure what makes up such and such an account, especially an asset account. Second, most of your accounting bosses are not the ones who have set up the accounts; they have just jumped on board half way and may be busy doing something else that makes them more visible to their boss than correcting some trivial or minor errors. Therefore, a practical lesson from this experience is this: Don't bother telling your boss that you think that this account is full of errors. Either you would just be given the cleaning job your boss always grudges doing or you would receive, at best, a cold shrug of shoulders. This situation seems to repeat itself in more aspects of your life than you might think. Be mindful!
1. If your boss asked you to follow an accounting practice which is theoretically incorrect, what would you do?
2. If you boss used you for a shield either against an outsider like a customer or an insider like the head of another department, what would you do? Ex: he wanted to you to talk aggressively to the controller or even vice president of a customer company who has repeated failed to pay your company's invoice due to some misunderstanding that cannot be solved by lower-level staff and that's exactly the company you don't want to mess with since you do not know if you would have to seek employment there one day!
Every organization needs some way of keeping accounts--that is, of recording what it spends and receives. The person who maintains these records is called a bookkeeper. Bookkeeping is part of the larger field of accounting. People who work as accountants prepare financial statements, study an organization's costs, calculate its taxes, and provide other information to help in making business decisions.
Underlying all bookkeeping is the simple T account, so named because its form resembles the letter T. It shows that money flows either in or out. The T account records this on the two sides of a perpendicular.
Assets and Liabilities
Opening a cash account is only the first step in establishing a bookkeeping
system. A home, car, personal and household belongings, insurance, bonds--all
these plus actual money make up a person's total worth. These possessions
are called assets. Each item has a value that can be expressed in terms
of money.
Most people also have certain debts, or liabilities, such as a mortgage, insurance premiums, taxes on income and property, and charge accounts. Liabilities must be recorded as well as assets. When the total value of one's assets is greater than the total value of one's liabilities, a person is said to be solvent--that is, in possession of more money (and property that can be converted into money) than is owed to others. A person's net worth is the difference between total assets and total liabilities.
Businesses and other organizations must have accounting systems in order to know whether or not they are operating profitably. A company's total assets include its cash, buildings, equipment, and accounts receivable (money owed by its customers). The company's assets must be weighed against its liabilities--accounts payable (money owed to its creditors), loans, and salaries.
Double Entry Bookkeeping
In any exchange of money, goods, or services, more than one person is involved. Thus there must be two parts to every transaction. In order to make a complete bookkeeping record of a transaction, entries must be made in two different accounts to keep the ins and outs balanced.
The simplest set of double entry books consists of a journal and a ledger. When a transaction takes place the bookkeeper first enters it in the journal. Transactions are entered as they occur. The bookkeeper regularly transfers the information in the journal to the various accounts, which are kept in the ledger.
These bookkeeping procedures furnish the information necessary to prepare three types of statements that show the financial condition of an individual or a business. They are the trial balance, the profit and loss statement, and the balance sheet. These statements usually are prepared at the end of a specified period, such as the calendar month, quarter year, or other desired interval. The trial balance is a list of debit and credit balances found in all accounts. The total of the debits must equal the total of the credits. Disagreement between totals shows there is an error (or errors) in the records.
The profit and loss statement tells whether the individual or business
has made a profit for the period. The balance sheet is a list of all the
assets and liabilities on the date of the statement. The amount by which
the total assets exceed total liabilities is known as the net worth.
Computers in Accounting
Electronic data processing (EDP) systems are widely used in bookkeeping and accounting. Information such as amounts, names, and account numbers is recorded on punched cards or on magnetic tape. The system performs tasks such as posting to ledger accounts, computing account balances, preparing payrolls, and printing financial statements. An EDP system operates with great speed.
The first electronic spreadsheet program for microcomputers was VisiCalc, which became available in the 1980s. This program is graphics-oriented and uses a database management system that can define, store, retrieve, and erase data. It also allows accountants to type in easier commands based on the English language for tailored reports, rather than requiring that users learn standard programming languages. Similar programs that were developed later, such as SuperCalc, Lotus 1-2-3, and Question and Answer, also have these functions in addition to other capabilities.
Accounting as a Career
Accountants and bookkeepers work for business firms, government agencies, and many other organizations. Certified public, or chartered, accountants are licensed by the state to provide accounting services to clients for a fee. They must pass a difficult examination to receive their certificates. The work of a certified public accountant (CPA) consists primarily of auditing the accounts of organizations to determine whether their financial statements are fair and reliable. CPAs also advise businesses and private individuals on income tax questions. Business firms and banks employ their own accountants to supervise their accounts and prepare financial statements. The Internal Revenue Service and the Securities and Exchange Commission employ large numbers of accountants.
(From Compton's Interactive Encyclopedia Deluxe © 1998 The Learning Company, Inc.)
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