Accounting

According to Wikipedia,

Accounting has been defined by the AICPA as ' The art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof.'

Most entrepreneurs don't like accounting. They see it as a dry, meaningless, numbers game. Don't believe it. Accounting measures the life's blood of your enterprise.

According to David Halberstam's book on the American auto industry, Henry Ford didn't like accountants because he thought they never did any real work. Real work to him was tangible stuff, like cars. Henry was a genius, but he did have some glaring limitations.

Accounting is extremely important. It's imperative for paying your taxes. But more importantly, it's the way you understand what's going on in your business. To know what's going on with anything, it's important to know where the money goes. Systematic accounting over time helps you know whether you're growing or not and why or why not. Knowing your finances day-to-day helps you make basic decisions.

MoneyInstructor.com adds that

Quite simply, accounting is a language: a language that provides information about the financial position of an organization. When you study accounting you are essentially learning this specialized language. By learning this language you can communicate and understand the financial operations of any and all types of organizations.

According to Rupp's Insurance & Risk Management Glossary (2002) accounting is

A system or method of recording financial transactions and reporting, verifying and analyzing the results. The surveying of pertinent data and subsequent preparation of statements representing the financial condition of an enterprise. The two most common accounting methods are the cash basis and the accrual method.

What do you think about this? Do you like accounting? Go to the Wikipedia article and read the whole thing. And follow the links. And post a comment.

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