Accounting: The language of business

Posted on | September 6, 2011 | No Comments

A definition of accounting that I have heard often is that ‘Accounting is the language of business’. I think that this is quite a good definition. The key use of language is communication. And the accounting process that culminates in financial statements is one way that a business communicates its business performance to the rest of the world including shareholders, investors, governments and lenders.

However, students often tell me that they unfortunately do not understand the language of business or accounting. I empathize with them! The point that I make is that the fault does not lie with the language of business or, in this case, accounting. The problem, when it arises, lies with the speaker. It is the users of accounting or the creators of financial statements that are responsible for clarity. If the management which creates the financial statements do not want the users to understand the language or to show the true picture of performance, they deploy various tricks to make it difficult to understand the financial statements. We invite you to learn the language of business with one of our accounting tutors online.

One really famous person who understands the language of business is Warren Buffett. He also knows how to do some ‘plain speaking’ ! He recently made his views on taxation clear. He has always maintained that he pays lower taxes than the poor. But his recent article and the timing of his comments have created a splutter! This may not have gone down well with the rich as illustrated by Joe Heller in the Green Bay Press! Joe Heller may or may not know accounting or the language of business but he definitely knows about communicating!

Learn accounting to understand the language of business.

Copyright Joe Heller, Green Bay Press.

Accelerated Accounting: Summer School

Posted on | June 13, 2011 | No Comments

Summer is here! Plan your holidays, pack your bags, hit the beach, jump on planes, summer school, skydiving ………. Here is another interesting offer if understanding accounting will in any way add value to your lives, careers or minds. 

We at accountingtutor.org are offering accelerated accounting summer packages.  At our accounting summer schools you can develop a personalized accounting boot camp that will help you get ahead in accounting whatever your level of understanding is today. You can work on a customized plan to master accounting over this summer given your individual needs.

Whatever your schedule, (day or night, weekday or weekend, a month or two months, …), whatever your need (work, new career, MBA school, CFA, …….), whatever your interest (financial accounting, managerial accounting, cost accounting, introductory accounting, advanced accounting, ……) we will work out a plan that is tailored to your needs so you will be able to get on top of accounting this summer. The best part is you can attend our summer school right from whereever you are.

Let the summer of 2011 propel you forward with a solid understanding of accounting.  Call us or email us now for more information on our accelerated accounting summer school.

General Electric: 2010 profit=$10 billion Taxes=$0!

Posted on | April 1, 2011 | No Comments

You’ve probably heard this by now. General Electric (GE) is paying no taxes in the US despite more than $10 billion in profits for the accounting year 2010! How can this be!? I’s earning a fraction (a tiny, little, minute fraction of the $10 billion to be clear) and I’m paying taxes!!

US corporations are usually taxed around 35% of the income! US GAAP indicates a 40% tax rate. Whats going here? The GE chief Immelt spoke recently and defended the position. He said

“At GE, we do like to keep our tax rate low, but we do it in a compliant way, and there are no exceptions,”

How could a company be a 100% compliant, have income and still pay no taxes! Well there could be many reasons for a situation like this to occur. In the case of GE, a company that has operations in 100s of countries with various operating entities, it reports profits for each country and entity separately. It so happens that it made no profits in the US while its international business was  profitable. And since it was not repatriating its profits back to the US this year (parking profits overseas) it did not have to pay taxes in the US!

There could be other reasons too for this situation arise. Lets look at one more situation as an example. A company may have profits and taxes due in a year but because prior year’s tax assets offset the taxes due, it could end up not paying any taxes.

Accounting for Programmers

Posted on | March 26, 2011 | No Comments

A few weeks ago we wrote a post titled “The Importance of Accounting for Investors“.  We believe that accounting is important for many professions and not just accountants.   What about computer scientists or programmers!?  The tech world seems very far away from the world of accounting!  But we think that accounting is important for computer scientists and programmers too. (call us biased if you will  Accounting is important for for computer scientists and programmers.

But don’t take our word for this. Martin Kleppmann is an entrepreneur and software ‘craftsman’. He is a co founder of Rapportive   and entrepreneur who has sold his former company (Go Test). Here is what Martin had to say in a recent post.

Every educated person really ought to have a basic understanding of accounting. Just like maths, science, programming, music, literature, history, etc., it’s one of those things which helps you make sense of the world. Although dealing with money is not much fun, it’s an unavoidable part of life, so you might as well take a few minutes to understand it.

We completely agree with his observation! He is not all kind to the accountants of the world. He continues…

Sadly, in my opinion, most accountants do a terrible job of explaining their work in an accessible way; it’s a field full of jargon, acronyms and weird historical legacies. Even “Bookkeeping for Dummies” makes my head spin. Surely this stuff can’t be that difficult?

Well, we still agree.  Accounting cant be that difficult!  We think it hasn’t been taught that well – thats it. At accountingtutor.org, we take students whose ‘heads spin’ and help them make sense of accounting. We believe that if accounting is taught step by step in the right manner, its really simple. Every one should get it.  Accounting is not that difficult and accounting for programmers is not any different.

Read Martin’s post above. He tries to explain it in programming language. We are accountants and not programmers so we don’t really get it. But we have developed our own ways to teach you accounting. Try us and let us help you learn accounting. Special welcome to computer scientists or programmers.

Arithmetic Average vs Geometric Average

Posted on | March 24, 2011 | No Comments

Arithmetic Average vs Geometric Average? One of our accounting tutors was having a debate with one of his students on which is a better measure of an average. After the debated, he pinged us to check what we think. We have an opinion but wanted to check what you think -Arithmetic Average vs Geometric Average?

Tell us what do you think? What do you prefer to use arithmetic average or geometric average? Its fair game to use arithmetic average on certain occasions and the geometric average on other occasions and if you do that tell us that too..

Leave a comment or better still email us. We are a little old fashioned!

Update: Some of you are wondering whats the difference between the Arithmetic Average vs Geometric Average? Well give you the update.