As I mentioned in my book, each semester I begin my Managerial Accounting class with the same question, “How many people DON’T have a background in Accounting?” On average, 90 percent of the class raises their hand. I follow up with, “What are some of the reasons that influenced your decision not to pursue a career in accounting?” The first three or four answers usually express a strong distaste for the concepts, practice, and profession that is associated with accounting.
I ask the final question, “Who hates Accounting?” The response is usually greater than 90 percent. All this banter leads up to the main punchline for the 90 percent of students who aren’t accountants, “Well, just as I suspected. The only people who hate accounting more than you are…accountants!”
Most people do not enjoy accounting. They don’t understand it. There seem to be millions of rules, and even if most people did understand accounting, what would they do with it?
The Typical Approach To Accounting
Accounting concepts have a history of being complicated. So, to make things easier, business owners typically hire an accountant, instead of trying to do it on their own.
They let the accountant do his/her job to the best of their abilities. They review the accounting/financial reports. And, the accountants are usually given the universal response. Accountant after accountant after accountant! No matter how long it has taken them to compile the information and present it to the decision makers; no matter how much data has been poured over to get decision makers their reports; the universal response is:
“These numbers are wrong!”
To be honest, I’ve said it myself to other accountants. Thus, I can’t say whether whoever declares, “These numbers are wrong!” is correct or not, even when it is me. Wondering if the numbers are wrong should never be in question.
In my opinion, assumptions and ill-defined expectations are where the mix up happens. Without understanding these concepts, clients can become frustrated with their accountants. Hopefully, we choose an accountant who we have confidence in providing us the information we need in a timely manner. There is some give and take with this relationship, but hopefully we are working with someone who is competent.
When approaching accounting, people should consider the following:
Whether the accountant is good or bad, we still wouldn’t be saying, “These numbers are wrong?” if we asked some thoughtful questions from the beginning, such as:
- What information do I need?
- What type of decision am I going to make with this information?
- What is the value of the information I am seeking?
- Is there value (or cost I’m willing to incur) for accuracy and/or precision?
- What do I do after I have the information and answers?
These all seem like simple straightforward questions, right? Well, I have found that if these questions are addressed prior to the creation of any accounting/financial report, the sense of, “These numbers are wrong!” diminishes greatly. In fact, these are the questions and answers that communicate goals and objectives to an entire team or company. Whether it is based on an accounting report or supported by one, understanding what is to be accomplished commonly gets overlooked in today’s organizations.
Reasons Why How Much Does It Cost To Make A Donut is Different
Because I understand accounting as well as the struggle many people have with it’s concepts, I decided to take a step back and write a book that can help everyone. The most important lessons I have learned in accounting have come from real-life experiences that weren’t taught in a textbook. Making mistakes and taking risks have been the best training ground to learn, not only more about accounting, but why it is so important. Stories of successes and failures have had the biggest impact on my professional growth. Therefore, I thought; “Why not teach accounting with stories rather than equations and spreadsheets?”
“How Much Does It Cost To Make a Donut?” delivers accounting knowledge in a series of entrepreneurial stories.
Using a start-up donut shop as a case study, this book incorporates general accounting concepts and reinforces them with a myriad of real-world examples. These exercises deal with the issues, personalities, and questions decision-makers encounter every day, and connect them to the accounting concepts that make a difference.
Before you give up on accounting completely, try, “How Much Does It Cost To Make A Donut.” It is far from your regular Accounting textbook.