ShmoopTube

00:00

Accounting Allah shmoop technology in accounting accounting yesterday Spend all

00:08

your time trying to figure out how to convert A

00:10

barter economy is value of thirteen buckskins forty two beaver

00:14

pelts four pounds of salt and two gallons of granny's

00:17

You know special sauce into one common currency Then try

00:21

to figure out how to divide all of it into

00:23

units that Khun B compared and allocated fairly and then

00:26

try to do the actual math of adding and subtracting

00:29

columns and rows without making errors You know long walks

00:33

with a short drink of water That was accounting yesterday

00:36

Accounting Today I'll fill in the boxes in a computer

00:39

spreadsheet That's about it Much of the time Premade software

00:42

holds your hand and you know any other body part

00:44

You want it told as you go through your entries

00:46

logging costs of plastic banana peel slipping insurance taxes and

00:51

so on It has built in error checking in many

00:53

cases And well you know the computer is never wrong

00:56

and yet wasn't always this way Fred Flintstone had just

01:00

a rock and a chisel and a hammer it away

01:02

numbers happy He had shiny rocks to sell an account

01:05

for any accounting profession remained this way from millennia until

01:09

this magic new media was invented called Paper Yes there

01:13

was a time in history when paper was high tech

01:15

way easier than rocked a hammer numbers into men Some

01:18

wise guy had the brilliant idea of putting lines on

01:21

the paper in graph form All of a sudden the

01:23

columns lines and grid thing he's added up It was

01:27

easy to have debits and credits all aligned The application

01:30

of technology was actually vital The growth of the world

01:33

super accountant was actually thing Why Well because when Fred

01:37

was counting beans or the rocks he sold there were

01:41

like ten of them A good day was ten rocks

01:43

selling for six grafter wings He had no employees no

01:47

unions no tax filings no capital equipment to depreciate That

01:50

was it But his industry became big and complex while

01:53

there came into one more beans account and had to

01:55

be counted in a bunch of different contexts And in

01:58

the U S Argentina Somalia and China one set of

02:01

beans was calculated for US government tax just another set

02:05

for non U S taxes That is one set of

02:07

accounting books were created solely to calculate how much was

02:10

owed for taxes and those books often were very differently

02:14

calculated Then we're the set of financial books that companies

02:17

use to operate their businesses strategically well like it's okay

02:21

to have two sets of books It doesn't mean you're

02:23

a crook if you do it Not other accounting book

02:25

is called in Operational Accounting Book All right well why

02:28

the def Or rather how do they differ Well when

02:31

it comes to taxes cos generally want to minimize the

02:34

amount they owe governments around the world so they lean

02:37

toward a kind of overstatement of their expenses and understatement

02:41

of their profits Very very conservative accounting to show thee

02:46

lowest amount of taxable profits possible But when operating a

02:49

business well different things come into play Operators don't worry

02:52

about depreciation speeds for that new factory they want to

02:55

build to crush the competition IAEA That's the analog of

02:59

automating product build to make a thirty cent horseshoe in

03:03

a dollar issue world right Like if you make him

03:05

for thirty cents you destroy the competition And yeah right

03:09

operators just worry about the strategy of the company so

03:12

it can keep growing and you know winning And then

03:15

there's another set of books for the financial management of

03:18

the company like one that answers the question How efficiently

03:21

is our capital being deployed Did we really need three

03:25

years and twenty eight million dollars worth of inventory stored

03:28

in our warehouse Or did we really just need two

03:32

million dollarsworth and the remaining twenty six million Well that

03:35

could have been deployed way more efficiently elsewhere Right Well

03:38

tons and tons of numbers to be crunched here And

03:41

without computers doing the computational work it'd be an awful

03:45

slog to get everything counted accurately If you ever wanted

03:48

to be within a stone's throw of any career that's

03:50

accounting related well you'll need to learn and love and

03:53

honor and cherish a program called QuickBooks It's the Oracle

03:57

the Yoda the center the Scott Cook of our world

04:00

We encourage you to take a quick gander at some

04:02

of the QuickBooks tutorials on their site or Ah you

04:04

know on YouTube You don't have to master the software

04:07

just yet Dip a toe in the water Now a

04:09

cannonball in from the high dive for later on

Full Transcript