Accounting: A Bigger, Better Bookkeeper

that to count up Not very but there's a food

chain in counting beans at heart bookkeepers Arthuis data gatherers

They assess what the actual numbers are E How many

bushels of corn were claimed to have been sold And

are there really four hundred cash dollars in the cigar

box At the end of the day they're like anyone

stealing anything Well in today's parlance bookkeepers a lower order

form of accounting would check to see what checks were

written this month and actually cleared the bank deposit system

without bouncing And for the ones that did bounce well

they'd execute a series of actions to hopefully in the

future collect that money and well he eventually ending with

a write off AII the money was never there or

the guys with the baseball bat were in fact successful

And then the money was collected and then went through

regular channels Yeah well book keepers have very narrow functionary

activities where they glean from multiple sources the basic information

and make sure that the revenues and expenses are loaded

into the system That's it It's kind of robotic They

don't really think broadly They just gather the data type

it in lather rinse Repeat well Accountants meanwhile are the

philosopher kings of this process They must actually uh what's

it called Oh yeah Think If Shmoop sold for one

hundred twenty dollars a one year subscription to its premium

product and the check cleared and was cashed Well what

is shmoop recognizes revenues Well the bookkeeper just deposited one

hundred twenty bucks into the Shmoop Wells Fargo account But

the one year subscription comes with a money back guarantee

for the first month thinking alert must think Answer not

obvious So while the bookkeeper just types in those numbers

Accountant has to figure out when and how to recognize

the dough Does she look at it like it's revenues

when the check is deposited Well what if the check

then bounces revenues Well what about when the check is

cashed But then also clears Is that then revenues or

well is that in fact just cash flow but not

revenues Well the answer just as it always is like

with diapers Yeah depends a number of people who make

us sad We'll ask for their money back from Shmoop

That's about one in five hundred Well using Gap we

must recognize the most conservative approach in terms of estimating

how many people will ask for their money back So

maybe we hold is a separate line item and allowance

for doubtful accounts and rich turns I eat people who

just want to get their money back and go away

quietly Or maybe we recognize no revenues until that first

month has entirely passed just to be on the extremely

safe side Then the accountant figures out whether they recognize

a hundred twenty dollars divided by the eleven remaining months

there to calculate the revenues Or maybe there's something else

like What about this What about alternatively we apply Gap

The accountant could then divide that hundred twenty dollars by

twelve and simply hold as a quote reserve account unquote

one month worth of subscription revenue Back that out right

As things clear and things were okay no one wants

their money back Then Everything is happy right So yeah

bookkeeping is just keeping the books Bookkeepers add up numbers

and columns neatly and accurately and the accountant conducts The

analysis is of that data Heavy thinking non robot replacing

next year stuff Okay so to really drive home this

idea a couple more examples Oh website has been selling

one hundred hair clips a week for five years Then

suddenly they sell ten thousand clips in one week Or

at least they get a request to ship ten thousand

of them to a P O box in Russia All

the bookkeeper just sends along the sales of ten thousand

and goes home at five o one p M The

accountant gets this number and things How do you say

my sight got hacked in Russian All right Another example

A sales person buys billboard ads to market their product

is not a cross of operating the business Or is

it a cost that should be directly associated with that

sales persons product Like there's lots of sales peoples in

the company but only that guy bought it So what

do you do with it How do you think about

that is an expense Will accountants make logical decisions about

where the right numbers go On a financial statement A

bookkeeper friendly just wouldn't care Yep we're sure some of 00:04:33.029 --> [endTime] them are very nice people though