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Accounting Allah shmoop a bigger better bookkeeper all right well

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before technology reared its ugly and a beautiful head Ah

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bookkeeper was all that small companies in a farming agricultural

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business driven world needed four hundred bushels of corn sold

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for a dollar of cash each Like How hard is

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that to count up Not very but there's a food

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chain in counting beans at heart bookkeepers Arthuis data gatherers

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They assess what the actual numbers are E How many

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bushels of corn were claimed to have been sold And

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are there really four hundred cash dollars in the cigar

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box At the end of the day they're like anyone

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stealing anything Well in today's parlance bookkeepers a lower order

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form of accounting would check to see what checks were

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written this month and actually cleared the bank deposit system

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without bouncing And for the ones that did bounce well

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they'd execute a series of actions to hopefully in the

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future collect that money and well he eventually ending with

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a write off AII the money was never there or

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the guys with the baseball bat were in fact successful

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And then the money was collected and then went through

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regular channels Yeah well book keepers have very narrow functionary

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activities where they glean from multiple sources the basic information

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and make sure that the revenues and expenses are loaded

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into the system That's it It's kind of robotic They

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don't really think broadly They just gather the data type

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it in lather rinse Repeat well Accountants meanwhile are the

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philosopher kings of this process They must actually uh what's

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it called Oh yeah Think If Shmoop sold for one

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hundred twenty dollars a one year subscription to its premium

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product and the check cleared and was cashed Well what

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is shmoop recognizes revenues Well the bookkeeper just deposited one

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hundred twenty bucks into the Shmoop Wells Fargo account But

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the one year subscription comes with a money back guarantee

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for the first month thinking alert must think Answer not

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obvious So while the bookkeeper just types in those numbers

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Accountant has to figure out when and how to recognize

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the dough Does she look at it like it's revenues

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when the check is deposited Well what if the check

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then bounces revenues Well what about when the check is

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cashed But then also clears Is that then revenues or

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well is that in fact just cash flow but not

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revenues Well the answer just as it always is like

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with diapers Yeah depends a number of people who make

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us sad We'll ask for their money back from Shmoop

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That's about one in five hundred Well using Gap we

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must recognize the most conservative approach in terms of estimating

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how many people will ask for their money back So

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maybe we hold is a separate line item and allowance

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for doubtful accounts and rich turns I eat people who

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just want to get their money back and go away

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quietly Or maybe we recognize no revenues until that first

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month has entirely passed just to be on the extremely

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safe side Then the accountant figures out whether they recognize

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a hundred twenty dollars divided by the eleven remaining months

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there to calculate the revenues Or maybe there's something else

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like What about this What about alternatively we apply Gap

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The accountant could then divide that hundred twenty dollars by

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twelve and simply hold as a quote reserve account unquote

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one month worth of subscription revenue Back that out right

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As things clear and things were okay no one wants

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their money back Then Everything is happy right So yeah

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bookkeeping is just keeping the books Bookkeepers add up numbers

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and columns neatly and accurately and the accountant conducts The

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analysis is of that data Heavy thinking non robot replacing

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next year stuff Okay so to really drive home this

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idea a couple more examples Oh website has been selling

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one hundred hair clips a week for five years Then

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suddenly they sell ten thousand clips in one week Or

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at least they get a request to ship ten thousand

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of them to a P O box in Russia All

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the bookkeeper just sends along the sales of ten thousand

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and goes home at five o one p M The

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accountant gets this number and things How do you say

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my sight got hacked in Russian All right Another example

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A sales person buys billboard ads to market their product

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is not a cross of operating the business Or is

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it a cost that should be directly associated with that

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sales persons product Like there's lots of sales peoples in

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the company but only that guy bought it So what

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do you do with it How do you think about

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that is an expense Will accountants make logical decisions about

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where the right numbers go On a financial statement A

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bookkeeper friendly just wouldn't care Yep we're sure some of 00:04:33.029 --> [endTime] them are very nice people though

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