The intrigue of Accounting
No, really. It's kind of interesting.
I'm taking Accounting for the first time, and went through an interesting lecture last night. (Some of the course is self-study using lectures-on-CD delivered by a guy named Norm Nemrow at BYU). Accounting itself might be called "intellectually titillating" -- it's got the hallmark that every Myers-Briggs "J" type can love: Details that all fit together so neatly. It actually has some elegance as a system of computation.
But what was interesting is how they are handling the fact that most accounting is actually done by computer programs these days. Companies used to need actual people sitting at desks entering transactions into ledger books, and then compiling the various accounts and totaling things up. Now, however, this is totally automated. When the grocery checker scans the can of Spam you are buying, a series of actions is launched, such as noting that one item of inventory has been sold and what price it sold for. The program automatically records the correct journal entries, debiting and crediting the expense, inventory, cash, and COGS accounts (it has access to how much the store paid to stock that can of Spam). Later, the program will total up the sales for that day. And at the end of the accounting period, it will make the necessary adjustments to the ledger, prepare the financial statements, and close the books.
This brings up two issues. First, why learn the nit-picky details of accrual basis accounting when it's all automated now? This is a more sophisticated version of the question, Why learn long division now that we have calculators? The CD lectures make the valid point that you really have to understand the process if you are going to be able to be responsible for, oh say, the accounting department at a company. I would certainly hope that the CFO of IBM knows the fundamentals backwards and forwards, no matter how tricky it is to remember that assets are debit accounts that get deducted when you receive cash. I was pleased that they stress the importance of learning things "manually" even when The Computer can mostly do it for you.
But this leads to the second issue. What, really, do accountants do at a company? Why have them? Well, it is certainly true that we have fewer of them than we used to. We just don't need banks of bean counters to keep track of everything. Instead, the accounting role has become much more strategic. Accountants now spend a lot of time analyzing the company's financial position in order to figure out where more cash can be squeezed out and where expenses can be lowered. This makes the accountant a more interactive company employee-- instead of mainly interfacing with the executives and the Sales department, they can usefully speak with Marketing and R&D in order to better understand how the business stays in business. I think this has the potential to be very positive: Getting the money people to talk to the product people has got to be better for coordinating the internal workings of a company.
Furthermore, there is a role for accountants in advocating more sustainable business practices. With an increasingly strategic (and less bean-counter-like) position, they could more easily see the advantages of operating an environmentally friendly and socially responsible business-- and be in a position to act on that knowledge by influencing executives.
With the rise of the Internet, librarians have been shrugging off their image as geeky quiet-freaks with sensible shoes. Maybe now accountants can show themselves to be intelligent and even forward-thinking.
I'm taking Accounting for the first time, and went through an interesting lecture last night. (Some of the course is self-study using lectures-on-CD delivered by a guy named Norm Nemrow at BYU). Accounting itself might be called "intellectually titillating" -- it's got the hallmark that every Myers-Briggs "J" type can love: Details that all fit together so neatly. It actually has some elegance as a system of computation.
But what was interesting is how they are handling the fact that most accounting is actually done by computer programs these days. Companies used to need actual people sitting at desks entering transactions into ledger books, and then compiling the various accounts and totaling things up. Now, however, this is totally automated. When the grocery checker scans the can of Spam you are buying, a series of actions is launched, such as noting that one item of inventory has been sold and what price it sold for. The program automatically records the correct journal entries, debiting and crediting the expense, inventory, cash, and COGS accounts (it has access to how much the store paid to stock that can of Spam). Later, the program will total up the sales for that day. And at the end of the accounting period, it will make the necessary adjustments to the ledger, prepare the financial statements, and close the books.
This brings up two issues. First, why learn the nit-picky details of accrual basis accounting when it's all automated now? This is a more sophisticated version of the question, Why learn long division now that we have calculators? The CD lectures make the valid point that you really have to understand the process if you are going to be able to be responsible for, oh say, the accounting department at a company. I would certainly hope that the CFO of IBM knows the fundamentals backwards and forwards, no matter how tricky it is to remember that assets are debit accounts that get deducted when you receive cash. I was pleased that they stress the importance of learning things "manually" even when The Computer can mostly do it for you.
But this leads to the second issue. What, really, do accountants do at a company? Why have them? Well, it is certainly true that we have fewer of them than we used to. We just don't need banks of bean counters to keep track of everything. Instead, the accounting role has become much more strategic. Accountants now spend a lot of time analyzing the company's financial position in order to figure out where more cash can be squeezed out and where expenses can be lowered. This makes the accountant a more interactive company employee-- instead of mainly interfacing with the executives and the Sales department, they can usefully speak with Marketing and R&D in order to better understand how the business stays in business. I think this has the potential to be very positive: Getting the money people to talk to the product people has got to be better for coordinating the internal workings of a company.
Furthermore, there is a role for accountants in advocating more sustainable business practices. With an increasingly strategic (and less bean-counter-like) position, they could more easily see the advantages of operating an environmentally friendly and socially responsible business-- and be in a position to act on that knowledge by influencing executives.
With the rise of the Internet, librarians have been shrugging off their image as geeky quiet-freaks with sensible shoes. Maybe now accountants can show themselves to be intelligent and even forward-thinking.
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