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Learn accounting for free

accountingcoach.com

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Re: Learn accounting for free

#51

Post by jermaustin1 »

marton_s wrote: post #3

I'm a software engineer who moved into freelance consulting a few years ago (I do back-ends and front-ends for mobile and web, nothing finance specific other than occasional credit card payment integrations). It's been a roller-coaster in many regards and one of the highlights is having learned a lot about bookkeeping, taxes, financial planning and everything that comes with running a small business in general. (Aspe…

> and maybe stop paying an accountant to do my taxes

My mother was an accountant for years, I learned a lot of accounting, but there is a MASSIVE difference between knowing how to basically bookkeep and the tax code.

I'm in the US - so might be easier in less tax-lobbied countries.

When I started my second consulting firm (after closing down my first when I took a "real job"), I initially tried to go at it myself, but payroll is a complex process, so I decided to outsource that. Cost me $20/mo, but saved me hours of work. Then when the end of my first tax year hit, I started trying to figure out how to do my corporate taxes myself. Downloaded all of the tax forms I could find that I needed, and printed the couple hundred pages of information. 4 weeks into filling out the forms and 2 weeks before a filing deadline, I gave up. To the best of my knowledge I had underpaid my quarterly estimates by $30k.

I reached out to a small business accountant (brother of a good friend), and for only $1200, he handled the 112 page tax return, found out I had only underpaid by less than $2000, also found a whole bunch of write offs I didn't even know to look for, and did a full reconciliation of my accounts for that.

It was at this point that I decided I will always pay for professionals to do the part of this job that I am not proficient at. All of my various accounts-related services add up to less than 1% of my revenue, and if it were even 5 or 10% of my revenue, I'd probably still pay it, just to know it was done correctly.

Re: Learn accounting for free

#52

Post by rahimnathwani »

xbryanx wrote: post #34
antaviana wrote: post #33

Earlier quoted context omitted.

AFAIK, borrowing money does not change Equity, because it increases Assets (more money in the bank) and Liabilities (more debt) by the same amount so Equity stays the same.

Where are you borrowing this money without any interest? "Money you borrow" and "cost to borrow that money" are rarely the same value.

If you take a $1MM loan from a bank:

- Your bank account (an asset) goes up by $1MM

- Your loan account (a liability) goes up by $1MM

So equity is unchanged at that point.

But every month after that, you'll be charged interest:

- Loan account (liability) increases (CR)

- P+L account (equity) decreases (DR)

Re: Learn accounting for free

#53

Post by tomcam »

teh_klev wrote: post #48
rahimnathwani wrote: post #9

Background: I'm a qualified accountant, and have taught courses on accounting and finance. My thoughts on OP: I read through the first two parts of the first course on this site: - Part 1 Introduction to Accounting Basics, A Story for Relating to Accounting Basics - Part 2 Income Statement Based on what I read, I could not recommend this. You could get to the end of the 'income statement' part, without encountering a…

> Frank Wood's book "Business Accounting 1" Pretty sure that was the book I grudged most having to pay for when I was at college in 1986. I truly despised accounting ;) Three years later and I end up writing code to extend dbFlex and supporting Pegasus accounting software, go figure :)

I feel you. One of the classes I failed during my brief time in college was symbolic logic. But I was a music major so who cared. A few years later I taught myself to program, and of course C & assembly were filled with Boolean operations and truth tables...

Re: Learn accounting for free

#54

Post by tomcam »

xbryanx wrote: post #36
cheradenine_uk wrote: post #25

Earlier quoted context omitted.

UK based, so YMMV. Moved from self-employed for the odd side gig, to UK LTD co, to VAT registered UK LTD co. The "business services mafia" will like to frighten you into believing you have to drop hundreds of £ on their services - plus £120/yr for an accounts package, more for payroll, business banking, etc. Because your mind is too tiny to comprehend the ways of the priests. e.g: Don't ever ask a question in a busin…

This sounds like every interaction I've had asking a question in a plumbing/electrician forum. Oh, if you're asking that question your definitely going to poison your entire house with sewer gas and/or burn the place down with that wiring.

If you knew me you would understand why these warnings are necessary...

Re: Learn accounting for free

#55

Post by rahimnathwani »

riccardomc wrote: post #45
antaviana wrote: post #33

Earlier quoted context omitted.

AFAIK, borrowing money does not change Equity, because it increases Assets (more money in the bank) and Liabilities (more debt) by the same amount so Equity stays the same.

This is true in a perfect market, based on Modigliani-Miller theory of capital structure. In reality, increasing debt to a certain point also increases risk, which in turn increases return on equity.

A change in return on equity isn't the same as a change in equity.

When a company takes a loan, even if that loan is so large as to make insolvency almost inevitable, there is no impact on equity (book value).

Re: Learn accounting for free

#56

Post by rahimnathwani »

teh_klev wrote: post #48
rahimnathwani wrote: post #9

Background: I'm a qualified accountant, and have taught courses on accounting and finance. My thoughts on OP: I read through the first two parts of the first course on this site: - Part 1 Introduction to Accounting Basics, A Story for Relating to Accounting Basics - Part 2 Income Statement Based on what I read, I could not recommend this. You could get to the end of the 'income statement' part, without encountering a…

> Frank Wood's book "Business Accounting 1" Pretty sure that was the book I grudged most having to pay for when I was at college in 1986. I truly despised accounting ;) Three years later and I end up writing code to extend dbFlex and supporting Pegasus accounting software, go figure :)

I found it in 2005 or 2006, a year or two after my MBA, and a few months after I started studying for professional accountancy exams.

I wish I'd found it earlier. It was more in-depth than the MBA material on financial reporting, and was presented more logically than the study guides I'd been using.

Re: Learn accounting for free

#57

Post by solatic »

rahimnathwani wrote: post #9

Background: I'm a qualified accountant, and have taught courses on accounting and finance. My thoughts on OP: I read through the first two parts of the first course on this site: - Part 1 Introduction to Accounting Basics, A Story for Relating to Accounting Basics - Part 2 Income Statement Based on what I read, I could not recommend this. You could get to the end of the 'income statement' part, without encountering a…

> Based on what I read, I could not recommend this. You could get to the end of the 'income statement' part, without encountering any definition of 'profit', which is the very thing that the income statement is meant to show.

The thing is, that while cash is a matter of fact, profit is a question of opinion. This is a fundamental truism in accounting. You cannot really teach how accounting allows you to express your opinion until you first understand which facts you have to work with.

Re: Learn accounting for free

#58

Post by darcys22 »

onphonenow wrote: post #22

I'm not a fan of debits / credits for folks not going into accounting properly. Porter has a book - the alternatives to debits and credits, using financial information. Basically accounting is an equation you keep in balance. Assets = Liabilities + Equity You can understand how any transaction "posts" by keeping this equation in balance (or solving it). You borrowed $100K? Your liabilities are + 100K, and cash (an as…

I find what you have said harder to follow than just knowing debits are positive and credits are negative.

The A=L+OE formula is a poor model for understanding accounting when the accounts dont fall neatly into those 5 high level categories. And unfortunately you almost immediately encounter accounts of that nature (accumulated depreciation and loans are great examples).

Re: Learn accounting for free

#59

Post by rahimnathwani »

boppo1 wrote: post #49
rahimnathwani wrote: post #9

Background: I'm a qualified accountant, and have taught courses on accounting and finance. My thoughts on OP: I read through the first two parts of the first course on this site: - Part 1 Introduction to Accounting Basics, A Story for Relating to Accounting Basics - Part 2 Income Statement Based on what I read, I could not recommend this. You could get to the end of the 'income statement' part, without encountering a…

Any advice for intermediate or advanced accounting? I studied finance in school, so I'm confident it the broad-strokes basics, but getting into deeper stuff is still intimidating.

I'm not sure of your starting point or your goals, but maybe:

1. Wood's Business Accounting 2

2. Some of the CFA study materials

3. Some of the 10kdiver threads: https://10kdiver.com/twitter-threads/

4. Books about financial fraud (that talk about incorrect ways to do accounting).

5. IFRS standards for your industry.

6. Googling 'Accounting for X', where X is something to do with your industry (e.g. 'virtual goods' or 'unpaid loan interest').

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