For Pros > Cognitive Concepts
For Pros > Cognitive Concepts
The Shear volume of Confusing Accounting Related Concepts and Confusing Commerce that was introduced to slow everyone down and bind them in odd ways is confounding. Basic Addition and Subtraction was turned into more complexity than a (fake?) Moon Launch. Many are cognitively bound so tight with false or confusing beliefs about bookkeeping and accounting they can't find a loose thread to pull on, while others are coming so unraveled, they are but a ball of loose threads sprinting for the ghastly gallows.
1) Two Types of Accounting. Theirs and Yours!
There are two types of Accounting.
With Tax Accounting, the categories you need to use to categorize transactions are defined for you by someone else (theirs)
With Cost Accounting there is far more free will and you can be a lot more creative (yours).
In fact, it's far, far easier to learn Tax Accounting first because of the known structures, so for the rest of this short website, anytime I talk "accounting", think Tax Accounting to keep things structured and simple for starters.
2) Bookkeeping and Accounting is a 4 task process. For some it can be a 3 task process and for simpletons wishing only for transactions lists it's only a silky two step! Until now, no single software product could meet the needs of all three user groups and allow users to grow from one group to another easily. But Times have Changed!! (please expand to learn more!)
The process of Bookkeeping and Basic Accounting is really amazingly simple, just like YOU!!
4 Task Users - The most complex small business users need to complete all four tasks above. Most CPA's and Bookkeepers won't file their taxes without a Balance Sheet.
3 Task Users - Smaller small business owners who don't use dedicated checking and credit card accounts AND/OR who are involved in real estate can only do items one through three above, AND that's A-O-K too! Individuals who like to think of their own commercial world as a small business would fall into this category too!
2 Task Users - Finally, some folks just need a place to record some transactions and categorize them. They don't care much about reports other than some totals. Many likely use an Income Statement but some may just print off transaction lists or custom reports and they are very content..
3) Much of the Accounting related confusion was in the words & words alone! You had all the math needed by the age of 8!! Do change the words and SEE how easy it is! (please expand this section and read quickly to drop a knot, lickety split!!)
As a follow on from the prior section..
In Business, they don't call Report #2 a Comparative Net Worth Statement when they clearly should.
In Business, and life, Net Worth can be calculated two different ways.
There is an Absolute Net Worth Statement AND
There is a Relative Net Worth Statement that leads to an Absolute value.
If all the records are in order, the two statements should result in the exact same number for Net Worth, and when they do, the accounting is said to be "in balance".
When accounting is "in balance", it means not a joule of energy was lost in the Bookkeeping and Accounting process!!
Instead of calling this process of comparing an Absolute and Relative Net Worth Statement to each other for data integrity reasons, it was called a "Balance Sheet".
Who makes that kind of confusion up?
I found that confusing until I learned to think about money as being energy in material form and until I learned to call a Balance Sheet a comparative Net Worth Statement. And from that day forward, I could no longer feel that very confusing knot!
EVIL SIDE NOTE:
1) Simple Software is all that is needed for Basic Business use, Personal Financial Management and a Simple Educational Process...
Pre-Digital Age >> Manually keeping books wasn't that difficult. Some people may have thought it was boring if they didn't see the energetic relevance. And if you had a lot of transactions it could have been deemed tedious. The Report Generation and Books Manipulation was a real bugger in the pre-digital age.
Digital Age >> We live in a digital age now and there is something called a "Spreadsheet" that is very well suited for accounting, even though it has many other beneficial uses too that are fully off the radar for most right now.
Instead of using a "Spreadsheet" to teach Accounting, 'they' either left digital tools out of the curriculum OR they took accounting students straight to a database system for some subtle suggestive reasons (aka passive mind control) One would need to look back into the contractual archives at curriculum licensing agreements to see what text book vendors and database vendors may have influenced the high school and college curriculum.
For very greedy and deviant reasons, everyone was lead to believe databases were the right tool for Accounting instead of it's more math oriented sibling called a Spreadsheet. Since the mid 90's , consumer and small business accounting and bookkeeping software has been primarily controlled by a single software vendor. And that vendor had very, very, very strong support for upgrade pushes from our Biggest Commercial Banks. (<< these are some of the guys you want to really keep eye-balls on, along with Insurance Companies and the Federal Bankers too!!)
For very greedy and deviant reasons, everyone was lead to believe Accounting was something they needed to sub out because it "was just too hard" for novices to handle. The only reason it was hard was because the basic education in High School and College was created to be intentionally confusing AND the digital tools created for use were designed with comparable confusion goals in mind.
2) 30 minutes was all it took for a proof of concept -- and BILLIONS have been spent chasing such a simple idea...
Building a spreadsheet to track transactions, reconcile them against bank statements and generate an Income Statement takes about 30 minutes total once you set your mind to it with a sound strategy.
Yes.
30 minutes.
And as for Comparative Net Worth Statements (aka a Balance Sheet), those can be prepared in about 10 minutes manually, once a good template is had.
Yup.
To date, people have spent BILLIONS upon BILLION of $$$$'s (Life Energy) for software and services they could have been doing for themselves with very little effort had their education been sound.
It was a literal Energy heist in-deed!!
3) 3 years part time have been spent turning a concept into a commercial and educational tool second to none!!
From late 2016 to late 2019 a half dozen iterations of progressively more powerful cloud based accounting spreadsheet templates were born with the sole purpose of creating functional and educational tools to replace the outdated database systems that never delivered as they should have.
Getting the Chart of Accounts, Ledgers and Income Statements humming along in a pretty way didn't take much time after the 30 minute proof of concept. Getting them humming in a way that was more "software oriented" and "user friendly" took time. The goal was the most commercial look and feel possible in a spreadsheet.
Hopping from a manual Balance Sheet preparation system to a modular digital system in the spreadsheet was one rather large leap after another, but the result was a simple and good working model and it can only get better from here!