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Learn accounting for free

accountingcoach.com

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Re: Learn accounting for free

#71
I've never gotten the reconciliation of many of these "learn accounting" guides with what it takes to do actual accounting. They seem to make a big deal of covering very basic concepts that I would expect anybody with a programming background to pick up in under 10 minutes. The topics covered by these guides are less complex than most APIs.

But when it comes time to do actual accounting, there is a whole host of much more complicated concepts - depreciation, capitalization, tax law, tax law, tax law, etc. And these never seem to be explained in any comprehensive way that would make me think I "know" accounting. Rather it's like the pedagogy is focused on basic math (which people call "accounting"), because you will only learn all of the details with experience.

I even felt this same divide when I tried out Quickbooks, which I had thought was one of the gold standards for small business accounting. I was hoping for something that would walk me through how I needed to categorize expenses, track assets for depreciation, etc. Instead I was greeted with basically a spreadsheet replacement to automate problems I didn't have (eg printing checks at scale).

Am I wildly off base here, or is there something else I'm missing?

Taking a look at the site posted, it does seems to have many chapters with later ones covering advanced topics. But for instance taking a look at the chapter on depreciation, there are still additional details you'd actually need to do your taxes. I can understand how a simpler model helps someone learning this as their "first field", and they'll learn the richer model later. But from the perspective of someone who knows how to program, I'm still left wondering what value there is from reading general guides versus eg directly digging into what tax law forces you to calculate.

Re: Learn accounting for free

#72

Earlier quoted context omitted.

If you're a mathy person, you might find this brief explanation is enough to get going. Where I say 'you', I mean 'your company', not you personally. * Assets: things you own (e.g. tractor, money in bank, money owed by customers) * Liabilities: things you owe (e.g. unpaid supplier bills, loan owed to bank) * Assets and liabilities are both measured in a single currency (e.g. $). * Equity (aka 'book value'): A measure…

This blog entry taught me a mathy way of understanding double-entry accounting: https://martin.kleppmann.com/2011/03/07/accounting-for-compu... Summarized: a ledger is a directed graph of accounts, where edges are transactions, and each transaction is recorded twice: in the "from" node and the "to" node.

The article is mostly correct[0], and is very good if the explanation clicks for you.

I suspect some people (even some HN readers) would find it easier to think of ledgers as lists of transactions with running totals.

[0] e.g. it's not strictly true that book value is a lower bound on company value

Re: Learn accounting for free

#73

Earlier quoted context omitted.

This sounds like something I'd be interested in learning more about. Do you have a couple examples of said data reconciliation issues, and the corresponding accounting approaches?

An easy example. In a well designed database that represents an accounting ledger, debits are positive numbers credits are negative. With double entry accounting, if everything is correct the entire ledger sums to zero at all times. It is trivial therefore to know if an error crept in to your system, maybe something posted only half the entry before erroring (btw always post a complete double entry inside a database…

Ah that makes sense. Thanks!

Re: Learn accounting for free

#74
post #54
post #36

Earlier quoted context omitted.

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...

Reminds me of David Mitchell's bit/rant in Would I Lie To You: https://www.youtube.com/watch?v=mKc32jQIY0w (01:28 if you're in a hurry).

Re: Learn accounting for free

#75
post #34

Earlier quoted context omitted.

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)

Presumably you'd have to pay back more than you get in the loan, right? Wouldn't your liability increase by more than a million dollars?

Re: Learn accounting for free

#76
I did not see any topics at the posted link devoted to tax accounting. Most small businesses (U.S., at least) have a lot of flexibility in how they keep their company books, but the core process of preparing the tax return involves making appropriate book-to-tax adjustments according to tax law. So the company will have at least two versions of the key reports, one for book purposes and one for tax purposes.

Re: Learn accounting for free

#77

Earlier quoted context omitted.

An easy example. In a well designed database that represents an accounting ledger, debits are positive numbers credits are negative. With double entry accounting, if everything is correct the entire ledger sums to zero at all times. It is trivial therefore to know if an error crept in to your system, maybe something posted only half the entry before erroring (btw always post a complete double entry inside a database…

You can also design your schema using unified ledger accounting ( https://en.wikipedia.org/wiki/Unified_ledger_accounting ) which captures both the transaction's debit and credit in a single row in a single table negating the need for a transaction.

The problem comes with trying to quickly find the balance of sub-accounts. It is common to need to find the balance of all of the general ledger accounts repeatedly and quickly when preparing accounts, or having to find all customer balances to see who has paid. Once you have 10m rows of data (easily done at an sme) this gets very slow indeed. It is common to have a second table that records running balances or balances at period ends to speed this up. This is why transactions are important or you find the individual accounts of the sales ledger control don't add up to the total. Some systems have an 'audit' tool that adds them all back up from the general ledger.

Re: Learn accounting for free

#78

Earlier quoted context omitted.

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)

Presumably you'd have to pay back more than you get in the loan, right? Wouldn't your liability increase by more than a million dollars?

Not until the interest accrues. You could (no idea why you would) borrow $1MM and immediately pay it back before owing any interest. You would need to reflect this on your books but nothing material has changed.

Re: Learn accounting for free

#79
post #62
post #24

Pardon my ignorance if any, but I find financials and accounting as quite boring things. Most problems in these are about tracing numbers, reconciliation and mismatches. What thril one can face in these areas? Any examples of challenges you see ?

I see accounting as the money version of a historical account of a company. In that vein, it's the complete data flow of money movements within said company - data from which you could determine strategic priorities, fraud, and power structure, among other things with the right analysis. I wonder if there's a good flick that shows how powerful a forensic accountant can be.

>I wonder if there's a good flick that shows how powerful a forensic accountant can be.

"The Accountant" starring Ben Affleck has it as a plot element.

Re: Learn accounting for free

#80
All of this could/should be replaced with coding.

Why not illustrating concepts by some coding with a database ?

It sucks, when those finance specialists have no idea on coding to teach others, which left a hole on those sucking ERP software to fill (but failed).

Or, if you can't teach using programming, you still don't get it.

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