Financial Accounting has always been somewhat of an annoyance to me, as far as I was concerned it should be straightforward but Accountants just complicate things. Simply sell your market (product or service) and get paid for it. Then simply record what you have sold, the cash collected, what you paid for the product (and if it is a service then what your time was worth, and the net is your gain. What is all the drama with when to recognise a transaction, adjustment, posting it before you see cash, depreciation of an asset (is the asset working and in use or not, when its no longer in use you delete it as an asset in your book! “Why are you stressing all of us”? Even for professional exams that had accounting modules, I just powered through and came out unscathed doing the barest minimum just to survive.
Over time we(financial accounting and I) developed a working relationship where I process simple information on the financials displayed by accountants, I simply check the profit and loss statement, the line items that generate those profits, what the profit before and after tax is and then I go on to review the expense breakdown, review the line items that make sense to me or have significant impact on the profit and loss and simply move on.
Then came business school and a course called Corporate Financial Accounting. Apparently now I am expected to know and understand financial accounting, know how and when to post transactions and basically know the back end of the Financials and Balance sheets I see, you can imagine how overwhelming the first class was.
How can you tell me that an asset is a debit. My core training rejects the idea, it was like antibodies violently fighting a foreign entrant into the body and my brain just refused to accept it. I mean, Assets are good things so they must be a credit. When you spend most of your time talking to people about Financial and Retirement planning and the importance of having assets that generate income to match your obligations and liabilities, you find it difficult to understand Asset being on the debit side. So, you can imagine my resistance when I heard increase in Assets is posted as a debit. What it meant in my mind was that having assets was a bad thing and I could not fathom that.
However, after I spent some time flailing in the wind and battling training versus principles, I told myself, “This cannot be so bad”, “I am pretty sure if I put my mind to it, I can get it”. So, for the rest of the class, I paid keen attention and made up my mind to follow, I began to understand the concept and see how and where it differed from my point of view and the perspective from which it was being addressed.
I cannot say I understood or got everything that was done in that class but at least I was not completely lost. The thing is, just because an idea sounds foreign to you, or a concept doesn’t agree with what you may have been used to doesn’t make it any less reasonable and if you truly open your mind to understand it, perhaps you will learn a thing or two that improves your thinking.
