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Accounting: There's No Accounting for Taste 40 Views
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Description:
Accounting is all about fairness, honesty, full and clear disclosure. Accounting allows companies and processes to be compared, fair and square.
Transcript
- 00:00
Accounting Allah shmoop no accounting for taste Well welcome to
- 00:07
the wonderful woolly world of accounting Hope everyone brought their
- 00:10
beans just so there's no you know Gap in your
- 00:14
understanding we're going to start by slinging a dozen or
- 00:17
so industry jargon in terms that you don't worry about
Full Transcript
- 00:20
comprehending him fully just yet For now let him just
- 00:22
soak into your skull and begin moisturizing your frontal lobe
- 00:26
You'll encounter them many more times between now and then
- 00:29
at the end of this course So if they don't
- 00:30
fully sit with you No problemo All right first up
- 00:33
gap And no it's not where you shop Gaffe is
- 00:36
arguably the most important concept in accounting so you should
- 00:39
at least be able to spell it Why so important
- 00:42
Well because easy accountants being oh so clever could easily
- 00:47
fudge are fake numbers so that profits aren't really profits
- 00:51
Along comes gap Yeah the overall gist of it Or
- 00:54
generally accepted accounting principles Gap That's what gap stands for
- 00:59
is that you should be conservative in your accounting estimates
- 01:03
Better toe under promise and over deliver next up accounts
- 01:06
payable It's what you owe You bought four thousand clay
- 01:10
mugs with swear words on them that you hope to
- 01:12
resell it Your carnival for five bucks each you agreed
- 01:15
to pay the swear cup vendor quote net thirty unquote
- 01:19
or thirty days later The four grand you owe her
- 01:21
Yeah That now is an account payable on her books
- 01:25
That four grand shows up as an account receivable because
- 01:28
it's owed or received Hubble from you do to her
- 01:32
thirty days after you signed on the stupid dotted line
- 01:37
Okay assets here's an ass And if you own it
- 01:40
it's an asset Another asset Well the forty three computers
- 01:44
you've bought over time the patents Dow Chemical offered to
- 01:47
pay you forty three point seven million dollars to buy
- 01:49
from you last week The six point eight million dollars
- 01:51
of cash you have in your Wells Fargo account The
- 01:54
four hundred twelve shares of Amazon your company got in
- 01:56
return for sharing drone intelligence with them Yeah all those
- 02:00
assets Okay What about liabilities All right well you borrowed
- 02:03
thirty two million dollars from the mob to begin your
- 02:06
Internet gambling business With sports betting still being illegal the
- 02:10
thirty two million dollars is a liability that well you
- 02:13
know you'd better pay The part of that debt that
- 02:16
you owe within the next year is a current liability
- 02:19
Dough you owe more than a year away is called
- 02:22
a long term liability All right moving on equity equity
- 02:26
is the ownership of your company It's the assets It's
- 02:29
the value of it It's the milk your cow has
- 02:32
produced over time and which sits in the vault as
- 02:35
cheese representing some form of the balance sheet equation lovingly
- 02:39
referred to as drunks around the world calling yes ale
- 02:42
or assets minus liabilities equals equity All right now let's
- 02:46
talk financial statements here moving on the day to day
- 02:49
tracking of a company's profitability as driven by revenues Less
- 02:53
expenses Yeah that's called an income statement otherwise lovingly known
- 02:57
as a profit and loss statements Then there's the balance
- 03:00
sheet That ale thing lives at the bottom right of
- 03:03
the balance sheet refrigerator there and the balance sheet is
- 03:07
a representation of the balance of assets you have against
- 03:11
well bills you owe like the liabilities and that net
- 03:14
number being the equity your company has produced right Ale
- 03:19
All right the big true ING mechanism in accounting is
- 03:21
fash flow because it's so hard to hide or lie
- 03:24
or cheat or deceive cash in one form or another
- 03:27
anyway Often gap accounting rules require noncash charges to be
- 03:32
categorized as expenses such that the accounting earnings of a
- 03:36
company often differ greatly from the actual cash production or
- 03:40
cash earnings of the company Well capital expenses and contractual
- 03:43
obligations that might have been paid for in cash in
- 03:46
advance have to then be depreciated or amor ties in
- 03:50
the years subsequent to their signing when the cash flowed
- 03:52
out in the years subsequent to their signing after the
- 03:56
cash has already flowed out So those items show up
- 03:59
as charges on the income statement But in fact they
- 04:02
are non cash So the cash flow statement is the
- 04:05
third leg of the stool of the three primary accounting
- 04:08
documents along with the income statement and balance sheets And
- 04:11
it's a necessary evil to track the production of cash
- 04:14
from those three primary sources AII cash generated or consumed
- 04:18
from operations That's one part of cash flow The second
- 04:21
is cash raised from financing activities And or then there's
- 04:24
a third one here Cash raised or lost from investing
- 04:28
activities in all three year tracked copiously like Big Brother
- 04:31
lives If you really dig all this stuff look hard
- 04:33
at doing away with the free throw practice after school
- 04:36
And instead well why not dive into accounting Top professional
- 04:39
accountants lovingly designated certified public accountants or CPS make very
- 04:45
nice money way more than high school basketball coaches and
- 04:48
have endless freedom with the way in which they use
- 04:51
their time except around tax season At which point do
- 04:54
out there pretty much chained to a desk with empty
- 04:56
Snapple bottles nearby waiting to be filled So as we
- 04:59
mentioned this is just a super cursory sampling of a
- 05:01
few of the key terms You're going to learn toe
- 05:03
love by the end of this course and well it's
- 05:06
a long course So chain yourself to your desk Allah
- 05:10
that c p a And have your own assortment of
- 05:12
Snapple bottles at the ready and I will help you 00:05:15.02 --> [endTime] account for them
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