As someone who’s never taken an accounting course in my life, I have often thought about doing so. But I’ve always managed to find a way to put it off. There are probably a lot of people out there like me — people who never had a burning desire to learn accounting but who, given the increasing complexity of personal finances, taxes, investing, etc., feel like they could use some guidance.
Well, it looks as if I should probably procrastinate a bit longer. According to this Wall Street Journal article by David Reilly, a lot of the rules of accounting are about to change. This would obviously affect corporate accountants much more than average Steves, but I think I’ll let the dust settle anyway.
I have to admit that, as an author, my first reaction to seeing this article was a primal one: a new set of rules will be great news for the people hired to write the new accountings texts, and sad news for the authors of the outgoing texts.
Here, from Reilly’s article, is the gist:
In coming months, accounting-rule makers are planning to unveil a draft plan to rework financial statements, the bedrock data that millions of investors use every day when deciding whether to buy or sell stocks, bonds and other financial instruments. One possible result: the elimination of what today is known as net income or net profit, the bottom-line figure showing what is left after expenses have been met and taxes paid. …
The project is aimed at providing investors with more telling information and has come about as rule makers work to one day come up with a common, global set of accounting standards. If adopted, the changes will likely force every accounting textbook to be rewritten and anyone who uses accounting — from clerks to chief executives — to relearn how to compile and analyze information that shows what is happening in a business.
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jwinters comments are sort of relief. I am starting an accounting program in the coming weeks and was made aware of the article when it came out a couple weeks ago. At first i thought i would be screwed and would be learning a dead language. But if it is mostly due to presentation of numbers and not the inner workings and concepts, then i wont be completely wasting my time.
jwinters comments are sort of relief. I am starting an accounting program in the coming weeks and was made aware of the article when it came out a couple weeks ago. At first i thought i would be screwed and would be learning a dead language. But if it is mostly due to presentation of numbers and not the inner workings and concepts, then i wont be completely wasting my time.
With regard to jwinter74′s comments, accounting at its core has not changed in a long long time (how the company tracks its own books). The GAAP rules and reporting rules are supposed to help people outside the companies get an apples-to-apples comparison of how each is doing. The problem is that net revenue is easily manipulated quarter by quarter (playing with operating expenses, bad debt write-offs, and inter-country cash flows being the obvious ones). Everyone knows that if you have bad news, bury it for a while so you can (a) dump it all in one quarter, and (b) release it when less investors are paying any attention. The “dump it all at once” approach is of course because you will be punished for a big loss as well as a small one, so may as well have one big bad one vs. a set of small ones (you are punished worse for a set of losses).
With regard to jwinter74′s comments, accounting at its core has not changed in a long long time (how the company tracks its own books). The GAAP rules and reporting rules are supposed to help people outside the companies get an apples-to-apples comparison of how each is doing. The problem is that net revenue is easily manipulated quarter by quarter (playing with operating expenses, bad debt write-offs, and inter-country cash flows being the obvious ones). Everyone knows that if you have bad news, bury it for a while so you can (a) dump it all in one quarter, and (b) release it when less investors are paying any attention. The “dump it all at once” approach is of course because you will be punished for a big loss as well as a small one, so may as well have one big bad one vs. a set of small ones (you are punished worse for a set of losses).
If this attempt is meant to be serious (well, we read about proposed changes too much too often that actually never make it to be implemented), then economists might want to get involved as well – it is often not clear from financial statements what the numbers correspond to. Investment information, for instance.
If this attempt is meant to be serious (well, we read about proposed changes too much too often that actually never make it to be implemented), then economists might want to get involved as well – it is often not clear from financial statements what the numbers correspond to. Investment information, for instance.
What are some popular and technical books and articles on accounting?
What are some popular and technical books and articles on accounting?