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Accounting: There's No Accounting for Taste 40 Views


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Accounting is all about fairness, honesty, full and clear disclosure. Accounting allows companies and processes to be compared, fair and square.

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English Language

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

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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