Monday, March 25, 2013

Accounting is NOT math

This is serious lack of blogging. My life is busy and it is so hard to find time to blog. Plus when I have time to blog, I feel very tired. It is not that I have nothing to blog; however, I have SO MUCH things I want to express in here. If you followed me, several of my recent posts were the something I wanted to write for a long time. Well, this is another one. I have been studying for accounting for two years now, and 99% people would say "You Must Be Good at Math!!" to me. I am sick of denying the answer. So here is the post to clarify the real meaning of accounting. 

1. Language of the Math and Number: Accounting is not just math, it is more about the meaning of the math. Not only we have to have the compute the correct number, but also we need to understand and explain the reason behind. The number often tells the liquidity and risk of financial situation in a company. Management uses the number to make decision and forecast. 

2. Right Number in the Right Place and Time: Most of the time, the accounting software can do the math for us.  Jobs for us are make sure we enter the number in the right place and at right time. We usually deals with series of data and some numbers are even accruals and deferrals, so we must difficiate. If one step was mixed up, it will ruin the entire result. It is pretty scary. 

3. A LOT of Rules/Laws of Math: Math in accounting is more complicated and tricky. There are SO MANY formulas, tables, rules, limits, and policies must follow. It is easy to get the wrong answer. Furthermore, we have to use human judgement applying those rules/laws to make sure the number make sense. 

4. Enter the Right Amount of Zeros: Math in accounting is extremely DETAIL oriented. One zero can make a HUGE difference. We really need to be organized and careful about our data entry.  

5. Make Sure to Balance and Match: This is VERY important (above four are important as well). If the number does not balance nor match, that means the financial information is wrong. We could spend hours and hours to find out what went wrong. Sometimes I feel accounting is "finding the penny." (no joke)

All in all, accounting is so hard!! I don't blame anyone who think that way. This is my face when I study accounting.... 

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