Robert Coon Guenzel ENC 1102-0014 3/31/14

Accounting: Behind the Numbers Lets begin with a few o!es" #ourtesies of o!es4us$#o%& '(hat)s an e*tro+erte, a##ountant.ne who loo!s at /our shoes while he)s tal!ing to /ou instea, of his own$0 '(hat)s the ,ifferen#e between an a##ountant an, a law/er1he a##ountant !nows he is boring$0 '(hat)s the ,ifferen#e between the %ale s2er% an, an a##ountant1he s2er% has a 1 in 230"000 #han#e of be#o%ing hu%an$0 4o!es li!e these are 5uite re+ealing about what 2o2 #ulture thin!s of a##ountants$ 6##ountants are +iewe, as intro+erte," boring" %athe%ati#al nuts$ 1he last o!e e+en suggests that a##ountants are inhu%an$ 6##ounting as a 2rofession see%s to be shrou,e, in %/ster/" surroun,e, b/ big nu%bers that +eil the a#ti+ities within$ 7ts not li!e golf ball ,i+ers where onl/ a few ha+e hear, of it but its also not li!e firefighters where 2eo2le !now what the ob is at its #ore$ 1hat has left the general 2ubli# left to their own ,e+i#es with onl/ %o+ies an, 18 to let the% 2ee! into a##ounting 9an, 7% sure 2eo2le in business reall/ ,o ha+e that %an/ #ar #hases" ruthless ri+alries" an, e*2losions:$ ;o allow %e to ,efine a##ounting$ 6t its +er/ basi#s" its !ee2ing tra#! of the %one/ /our business s2en,s an, earns through its %an/ transa#tions$ <oure 'a##ounting0 for e+er/ transa#tion /our business ,oes$ E+en for things li!e in+estigating frau,"

its loo!ing at where the %one/ has gone$ 1hat is the ob at its #ore$ Now" the 2a2er will briefl/ elaborate on the inten,e, au,ien#e$ 7 will e*2lain wh/ this is %ost rele+ant to #ollege stu,ents 92arti#ularl/ business an, un,e#i,e, stu,ents:$ 1hen 7 will illu%inate the histor/ of %o,ern a##ounting$ 6s the 2a2er 2rogresses" the fo#us will shift to the realities of the a##ounting 2rofession$ =/ rea,ing what others ha+e written about a##ounting" 7 #an 2ie#e together a %ore realisti# i%age of a##ounting an, what reall/ ha22ens behin, the s#enes$ 7 will ,is#uss the e,u#ation re5uire%ents to start in a##ounting or the 'E,u#ation0" 2ro#ee, to the te#hni#al wor! a##ountants ,o or the 'Nu%bers0" an, e*a%ine the role of so#iabilit/ in the 2rofession or the ';o#ial0$ >irst" the inten,e, au,ien#e for this 2a2er are #ollege stu,ents$ ?ore s2e#ifi#all/" this 2a2er is ai%e, at business %a ors an, un,e#i,e, stu,ents$ >or business stu,ents" a##ounting is a fun,a%ental as2e#t of business$ 6##ounting is #alle, 'the language of business$0 1his being sai," all business %a or stu,ents are re5uire, to ha+e a wor!ing !nowle,ge of a##ounting$ .n the fli2 si,e of the au,ien#e" we ha+e the stu,ents who are #urrentl/ un,e#i,e, in what the/ will %a or in$ 1he/ are in+estigating +arious obs to #o%2are an, #ontrast with their own s!ills an, ,esires$ 7n this #ase" it woul, be wise to at least #onsi,er a##ounting$ 7ts be#o%ing a bigger 2ros2e#t in the e#ono%/ with both the in#reasing nu%ber of businesses o2ening u2 an, the e*isting ones growing e+en larger$ ;o%eone nee,s to !ee2 tabs on the businsess %one/$ 7t, 2robabl/ be best for an un,e#i,e, stu,ent to loo! #loser at a##ounting" 2erha2s ,o an in,e2en,ent in+estigation of their own$ 7f an/thing" itll be so%ething the/ #an %ar! off on their list of 2ossibilities" %a!ing the 2ro#ess of eli%ination a bit easier$ 1he histor/ behin, a##ounting has been a long tre!$ 7t has been aroun, sin#e the beginning of #i+ilization$ 6n,rew =eattie fro% in+esto2e,ia$#o% ,es#ribes that the original wa/

of a##ounting all the business a#ti+ities was si%2l/ writing ,own the transa#tions in a sort of narrati+e st/le" ba#! when the e#ono%/ ran on a barter an, tra,e s/ste%$ >or e*a%2le" '1ues,a/" 62ril 10th - 7 e*#hange, 3 gra2efruits for 10 fish with 1hor2e 9>isher%an:$0 6s #urren#ies e%erge," the le,gers were u2,ate, with nu%bers" though still in a rather narrati+e st/le in a single #olu%n$ 1his sort of a##ounting is #alle, single-entr/ boo!!ee2ing an, is si%ilar to us !ee2ing tra#! of our #he#!boo!$ 6n e*a%2le of this s/ste% woul, loo! li!e this& @ate 62r 10th 62r 10th 7te% ,es#ri2tion ;ol, 3 gra2efruits =ought 10 fish 6%ount -A30$00 BA30$00

Cowe+er" this was ineffi#ient sin#e 'DiEt was ne#essar/ for the boo!!ee2er to rea, the ,es#ri2tion of ea#h entr/ to ,e#i,e whether to ,e,u#t or a,, it when #al#ulating so%ething as si%2le as %onthl/ 2rofit or loss$0 96n,rew =eattie: Now" the beginnings of %o,ern-,a/ a##ounting #a%e about in the late 13th #entur/$ =ob ;#hnei,er fro% in+esto2e,ia$#o% tra#es the #urrent s/ste% in 2la#e ba#! to 14F4$ 7t began with Lu#a Ga#ioli in his wor! Summa de Arithmetica, Geometria, Proportioni et Proportionalita. 7n it" he ,es#ribes the ,ouble entr/ boo!!ee2ing s/ste% using ,ebits 9in#reases with ,i+i,en,s" e*2enses" assets" losses: an, #re,its 9gains" in#o%es" re+enues" liabilities" owners e5uit/: to log +arious a#tions$ 6n e*a%2le woul, loo! li!e so&

@ate 62r 10 62r 10

7te% @es#ri2tion ;ol, 3 gra2efruits @ebit-Cash Cre,it-Gra2efruit =ought 10 fish @ebit->ish Cre,it-Cash

@ebit A30$00

Cre,it A30$00

A30$00 A30$00

;#hnei,er %o+es on to the 7n,ustrial Re+olution whi#h #reate, the nee, for %ore #o%2le* #ost a##ounting s/ste%s$ 7n turn" 2ubli# status of a##ountants rose to the 2oint where it be#a%e an a#tual" full/ fleshe, out 2rofession$ 1hen in 1HHI" 31 a##ountants for%e, the 6%eri#an 6sso#iation of Gubli# 6##ountants$ 6bout a ,e#a,e after" the first stan,ar,ize, a##ounting test was gi+en an, CG6 li#ensing began soon afterwar,s$ >ast forwar, to the Enron s#an,al in 2001 that le, to the ;arbanes-.*le/ a#t$ (hat that a#t ulti%atel/ ,i, is ni#el/ su%%e, u2 b/ 7n+esto2e,ia$ 7n+esto2e,ia states that the two 2ro+isions to note are 'DsEe#tion 302& 6 %an,ate that re5uires senior %anage%ent to #ertif/ the a##ura#/ of the re2orte, finan#ial state%ent0 an, 'DsEe#tion 404& 6 re5uire%ent that %anage%ent an, au,itors establish internal #ontrols an, re2orting %etho,s on the a,e5ua#/ of those #ontrols$0 9;arbanes-.*le/ 6#t .f 2002 - ;.J: Now ea#h in,i+i,ual senior %anager of a #or2oration %ust affir% to the a##ura#/ of the finan#ial re2orts an, there are now stri#ter re5uire%ents for %aintaining an, re2orting finan#ial a##ura#/$ 1his %a,e engaging #lients for #onsulting %ore restri#te, for a##ountants sin#e a##ountants %ust now a,here to the #ontrols an, re2orting that the a#t re5uires$ Gara,o*i#all/" though" this has le, to %ore ,e%an, for a##ountants sin#e its a little %ore ,iffi#ult with the new restri#tions 2ut in 2la#e$ 1herefore" 2eo2le are going to hire a##ountants who !now how to wor! with these new restri#tions$ (ith the 'E,u#ation0" it see%s that the general 2ubli#s i,ea is /ou nee, #ollege e,u#ation for it$ 1he %ini%u% e,u#ation re5uire%ents for an a##ounting ob is a ba#helors ,egree a##or,ing to #it/towninfo$#o% whi#h woul, li!el/ be the a+erage guess fro% those unfa%iliar with the 2rofession$ Cowe+er" that see%s to be the bare %ini%u%$ ?an/ businesses are loo!ing for a##ountants with %aster ,egrees or ha+e 2asse, the CG6 e*a% to be#o%e a CG6$ 1o earn a %asters ,egree" that is four /ears for the ba#helor 2lus another /ear or two for the

%asters$ 1o be#o%e a CG6" that is 130 se%ester hours worth of #ollege whi#h is roughl/ e5ui+alent to a %asters but also re5uires 2assing the CG6 e*a%$ 1he site #it/towninfo$#o% states that the e*a% itself is +er/ ,iffi#ult$ 1he/ state that less than 30K of 2eo2le ta!ing the test 2ass on the first tr/ though 7 ha+e seen lower 2er#entages elsewhere 920-30K a##or,ing 6,,ison Care/ 777:$ Cowe+er" while this %a/ see% ,aunting" lets bear in %in, that this is loo!ing at a##ounting fro% the 2ers2e#ti+e of a #areer whi#h often re5uires %ore e,u#ation be/on, the %ini%u% as the #areer 2rogresses$ ?an/ 2rofessions often re5uire %ore s2e#ialize, training as /ou 2rogress$ >or e*a%2le" an a##ountant %ight s2e#ialize in frau, in+estigation$ >or the ti%e being" 2ros2e#ti+e a##ountants shoul,nt worr/ about 2ursuing %aster ,egrees or %eeting CG6 5ualifi#ations$ 6s for the Nu%bers" /es" there is a lot of %ath an, nu%ber #run#hing$ 6##ounting as a whole is go+erne, b/ one si%2le e5uation& 6ssetsLLiabilitiesB.wners e5uit/$ 6ssets are things of e#ono%i# +alue the business hol,s li!e #ash$ Liabilities are obligations to other entities li!e ,ebt$ 6n, .wners e5uit/ is the resi,ual interest the owner has in the business whi#h woul, be so%ething li!e retaine, earnings$ =ut its not ust nu%ber #run#hing$ 1here are other ,ifferent +arieties of things a##ountants %ust ,o" ,e2en,ing on their 2osition$ 6,,ison Care/ 777 2ro+i,es a ni#el/ ,etaile, #ase in his arti#le '6##ounting& (hats the Real (orl, of 6##ounting li!e-0 where he ,es#ribes the ob of a re2orting a##ountant$ 1he re2orting a##ountant ha, to loo! at the ,ifferent transa#tions an, entries for the #o%2an/s a#ti+it/ o+er a 2erio, of ti%e an, e*2lain +arian#es in s2en,ing or bu/ing 91he =la#! Collegian" 3I:$ 1he/ essentiall/ in+estigate, e+er/thing the #o%2an/ ,i, in ter%s of business a#ti+it/" a##ounting for an/ an, all +arian#es that initiall/ ,ont %a!e sense$ 6s it turns out" the wor! a##ountants is %u#h broa,er than 2eo2le %a/ e*2e#t$ 7n a,,ition to re2orting a##ounting" Care/ also ,es#ribes re#on#iling trust a##ounts

a%ong other balan#e sheet a##ounts 93H: whi#h re5uires anal/zing an, resol+ing ,ifferen#es in s2e#ial ban! a##ount state%ents #alle, trusts$ 7n ,oing so" the a##ountants then #lear u2 an/ 2roble%s so that %anage%ent has the %ost a##urate nu%bers to base their ,e#isions off of$ 1he ;o#ial 2art of a##ounting 2la/s a %u#h larger role than 2eo2le see% to e*2e#t" what with their i%age of a##ountants being reser+e, an, with,rawn$ 4a#ob 4$ Le+/" 4ohn @$ Ri#har,son" 4ohn ( Lounsbur/" @estin ;tewart" Lu#/ ($ Gibson" an, 6,a% ($ @rost of Gersonalit/ 1raits an, Career ;atisfa#tion of 6##ounting Grofessionals state that 'E*tra+ersion was highl/ #orrelate, with #areer satisfa#tion a%ong a##ountants$$$0 924M:$ 7 %ust note that the/ ,efine e*tra+ersion as how so#iable /ou are" how o2en /ou are with other 2eo2le$ ;o with that" it %a/ #o%e as a sur2rise to learn this$ 7t woul, see% that abo+e all" a##ountants woul, be intro+erte,$ 1he/ write that 'DtEra,itionall/" the fiel, has been suite, for intro+erts$$$ 7n re#ent /ears" howe+er" a##ountants ob ,e%an,s are #hanging to e%2hasize the i%2ortan#e of inter2ersonal #o%%uni#ation an, intera#tion with #owor!ers in tea%-base, a#ti+ities$0 (e shoul, re%e%ber that abo+e all" a##ounting is a 2rofession in business$ =usiness is +er/ %u#h base, on so#ial ties an, #onne#tions$ 7n this ,a/ an, age" with all of the so#ial %e,ia e+er/where" this is es2e#iall/ i%2ortant" to the 2oint that a fiel, that was originall/ suite, for intro+erts is now #hanging to be %ore tea%-oriente,$ 6##ounting has see%e, ,aunting to %an/" li!el/ be#ause of its un!nowns$ 1he onl/ #ertain thing was %ath$ (ith this %/sterious aura" it left roo% for %/ths to see2 into the 2ubli# #ons#iousness$ 6##ountants #a%e to be 2er#ei+e, as intro+erte," %athe%ati#al frea!s but the truth is %ore #o%2le* an, nuan#e,$ <es" there is a lot of %ath but its not si%2l/ %ath$ 1heres also roo% for #reati+it/ an, ,e,u#tion in this line of wor!$ Glus" #ontrar/ to the asso#iation of intro+ersion with %ath" a##ountants are often nee,e, to #ollaborate an, wor! with others$ =eing

with,rawn" while not i%2ossible" #an be +er/ ,etri%ental to the 2ro e#ts out#o%e an, the tea%s 2ro,u#ti+it/$ 1he le+el of e,u#ation for a##ountants is ,efinitel/ relati+el/ high but 2erha2s higher than 2eo2le e*2e#te, at first$ 1his le+el of e,u#ation e*2e#te, shoul,nt ,eter those stu,/ing it" though" sin#e that is usuall/ a le+el of s2e#ialization in the 2rofession$ ?an/ 2eo2le in %an/ 2rofessions un,ergo so%ething si%ilar$ 7 ho2e that this has #leare, u2 an/ %is#on#e2tions /ou hel, about a##ounting$ 1han! /ou for rea,ing$

(or!s Cite,&

'6##ountants .ne Liners 4o!es0 jokes4us.com$ (eb$ 62r 10$ 2014$ '6##ounting E,u#ation Re5uire%ents0 Citytowninfo.com$ (eb$ 62r 10$ 2014$ Care/ 777" 6,,ison$ N6##ounting& (hat)s 1he Real (orl, .f 6##ounting Li!e-$N =la#! Collegian 33$3 92003:& 31-3H$ 6#a,e%i# ;ear#h Gre%ier$ (eb$ ?ar 31$ 2014 =eattie" 6n,rew$ '>inan#ial Cistor/& 1he E+olution .f 6##ounting0 7n+esto2e,ia$#o%$ (eb$ 62r 1I$ 2014 Le+/" 4a#ob 4$" et al$ NGersonalit/ 1raits 6n, Career ;atisfa#tion .f 6##ounting Grofessionals$N 7n,i+i,ual @ifferen#es Resear#h F$4 92011:& 23H-24F$ 6#a,e%i# ;ear#h Gre%ier$ (eb$ 31 ?ar$ 2014$ ';arbanes-.*le/ 6#t .f 2002 - ;.J0 Investopedia.com. (eb$ 62r 1I$ 2014$ ;#hnei,er" =ob$ '6##ounting =asi#s& Cistor/ .f 6##ounting0 7n+esto2e,ia$ (eb$ 62r 10$ 2014$

;te+en C$ Cunt " 6$ 6nthon/ >algiani O Robert C$ 7ntrieri 92004: 1he Nature an, .rigins of ;tu,ents) Ger#e2tions of 6##ountants" 4ournal of E,u#ation for =usiness" IF&3" 142-14H$ (eb$ ?ar 31$ 2014