Re: Fwd: Article on Accounting

[beamends <..hidden..>]

On Mon, 2008-06-02 at 08:21 -0700, Chris Travers wrote:
> On Mon, Jun 2, 2008 at 1:52 AM, beamends <..hidden..> wrote:
> 
> >>
> >> Nice article on accounting, a few of the list-readers could use it :P
> >>
> >> I'd post but the ledgersmb list doesn't like chinese ip's ...
> >>
> >> http://www.asifism.com/news-about-this-site-and-me/accounting-quickbooks-sage-peachtree-or-microsoft-office-accounting-part-one/
> >>
> >
> > Unfortunately the author makes the same mistake as so many do - failing
> > to separate day-to-day operation of the business from accounty type
> > things (depreciation) which are only visited a few times a year.
> > The after asking round a bit, it seems the vast majority of small
> > businesses (>3 employees) have no computer system at all, pay a
> > book-keeper to enter things (they don't know, or care, what into),
> > and see their accountant about twice a year (end-of-year and when the
> > but a "new" van or such). They have no interest in accounting whatsoever
> > (after all, they pay their accountant to do that, just like they pay the
> > garage to service the van - they neither know nor care how the van works
> > as long as it does).
> 
> Most of the small business owners I know only want to know enough
> accounting to ensure everything is in order (this means learning the
> basics and no more).  So this would probably be in line with your
> observations.
> 
> I thought the mistake was a deeper one than that-- not understanding
> what accounting is well enough to understand why that separation was
> impossible (blaming accountants and governments when there is an
> inherent issue).  My view is that accounting is a branch of applied
> mathematics which is designed to provide financial information about
> an economic entity, and so, no matter how much you automate common
> things, you still need a manual interace so that you can ensure that
> the information is accurate
> 
> BTW, depreciation is one of those things we are looking at automating
> down the road, but it also highlights this problem:  there are many
> ways of handling depreciation and they are appropriate for different
> envionments (straight-line, sum of years, per unit of production,
> etc), and may even be appropriate for different parts of a business
> (in a factory, depreciate many of the machines per unit produced,
> depreciate the office furniture using a straight-line method, etc).
> If you don't discuss the matter with an accountant how do you know you
> are choosing the best option for your business?
> 
> Similarly, even as we intend to automate most typical adjustments
> eventually, we will never get them all.  Hence the accounting
> interface could get less use, but it still needs to be there.\
> 

Absolutely, that's rather the point I was trying to make. I am guilty
though of forgetting the international side of things - in the UK the
taxman has pretty much everything nailed down on depreciation at al,
there is no room for manouver for any "normal" cases, even down to how
much they expect an evening meal to cost! Obviously this isn't the case
elsewhere.

> However it still made an interesting read, so I figured I would pass it along.
> 
> Best Wishes,
> Chris Travers
> 

Cheers
Richard

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