Accounting 101

Who says that for you to understand Accounting, you need to be a math wizard? Uh, well, that was me. That's what I used to believe.

Humility aside, I am quite good with numbers--algebra, algorithms, cosine, etc.-- that is why I wanted to take up Engineering in college in the first place. But, no! my Mom said. There are more job opportunities if you take up Accounting, she said.

And so here I am, an accountant in a financing company, doing the paper works, books, documentation, reports, taxation, payroll and everything under the sun. So where was the math? The only mathematical operation you need to master is addition and subtraction. Translate that to accounting and it would be: Debit or Credit.

Accounting, mind you, is not all math. In fact the best skill that you could probably have here is the reading comprehension and analytical skills. In school, for you to solve the problem, you have to understand very well what it is asking for and then analyze whether you will deduct or subtract. If you have poor comprehension, then that's where the problem sets in.

From first year to fourth year, the only equation that we were asked to master is Assets = Liabilities + Equity. Solve test problems and you will still work your way around that equation for you to answer it correctly.

At work that equation is all you need to prepare your financial statements. That equation is the core of Accounting and a must to be mastered. Probably, I will discuss and elaborate about it further in another post.

I don't know why they seem to make accounting look so hard, when if fact we do accounting in our everyday life. From the time that we were students and receiving allowances from our parents, we are already performing accounting. Your weekly allowance less your weekly expenses equals savings, err-- in that case, excess money for gimmick time.

Well, being an accounting student is hard because of all the hard-to-pass subjects. Then, after graduation, you still have to study for the board exam which is more and extra difficult than when you were in the undergrad. But all of this are just training ground to prepare you for the real accounting world.

You would be surprise once you are already working that accounting is fun. Full of pressure but fun. It is not about calculus or geometry. It is not about algebra or algorithms. It only requires business math. Master the credits and debits, master the equation and you will survive accounting 101.