Financial Accounting Basics

I just asked for advice from Andrew Trinh of Trizle (a business consulting firm, if you haven’t heard–and a kickass one, if you ask me.) Here’s the reply, verbatim, so you could kick more asses than most guys do:

Hi Hendy,

Yes! The best accounting book I know is called “The Accounting Game”. It’s an amazing book that’s so easy and efficient to learn from.

I think the best accounting software (is this for personal finances) is anything from Intuit ( e.g. Quickbooks, Quicken, etc.)

I wrote this way back: http://www.trizle.com/how-to-read-a-financial-statement/, but you can learn a lot more by Googling for accounting info as well.

Let me know how I can help more!

Thanks, Hendy!

Best,
Andrew

On a note, here’s the book Andrew recommended:

The Accounting Game: Basic Accounting Fresh from the Lemonade Stand

The world of accounting can be intimidating. But, more often than not, there’s no way to avoid it – even non-financial jobs venture into financial jargon and concepts. For those trying to get more done at the office, organize the dollars and cents in a small business, or just in need of a refresher, there’s no reason to turn to the average number-crunching class again.

The Accounting Game presents financial information in a format so simple and so unlike a common accounting textbook, you may forget you’re learning key skills that will help you get ahead!

<br />This book uses the world of a kid’s lemonade stand to teach the basics of financial language and records. You’ll run your own lemonade stand and make it grow by creating signs to advertise it, borrowing money from Mom, buying lemons and sugar and selling to the whole neighborhood. As you run your stand, you’ll begin to understand and apply financial terms and concepts like assets, liabilities, earnings, inventory and notes payable, plus:

• Know the difference between accrual vs. cash accounting methods
• Create and understand an income statement and balance sheet
• Track inventory using LIFO and FIFO
• Create cash statements and understand cash flow and liquidity
• Apply your new knowledge to real-life situations

The revolutionary approach of The Accounting Game takes the typically mundane subjects of accounting and business finance and makes them something you can easily learn, understand, remember and use!

“The game approach makes the subject matter most understandable. I highly recommend it to anyone frightened by either numbers or accountants.” –John Hernandis, Director of Corporate Communications, American Greetings

The Accounting Game is produced by Educational Discoveries, the training industrys leader in accelerative learning technology. More than 70,000 people have graduated from The Accounting Game, the world’s most successful one-day financial seminar.

Excerpt from the Introduction of The Accounting Game:

How do people really learn? The answers and theories are endless. They include ideas ranging from genetic imprinting to osmosis and modeling and emotional intelligence. Brain research is voluminous as we enter the 21st century. A later book in this series will deal with the scientific basis of that research and how Educational Discoveries, Inc. uses that research to work with corporations to achieve extraordinary results.

For now, though, please ask yourself: How do I learn?

Isn’t that an interesting question? And, what do you learn? Do you learn information from reading, watching videos, using computers? Can you learn “people skills” without interacting with other people? Can you change behavior without a model of what the ideal behavior should look like? Feel like? Are there people you meet in your daily travels that you want to emulate? Do you emulate them? How does it work? Can you remember the words of the songs from childhood, but not the ones you listened to last week or even this morning? Questions and questions. More than any other thought process, questions help us learn.

Remember what we heard about a baby’s first year of life? Babies learn more in that year that in all the years combined afterwards. Yet, in that first year, babies cannot pose questions in the way they will once they learn language. So, how do babies learn? And what can we take away from that to help adults learn more quickly, retain new information longer, and apply it immediately in their lives?

So, what does this have to do with you and this book? Good question.

The Accounting Game is written in a way that creates a specific learning experience for you as well as teach you the basic skills of accounting. We call the learning method accelerative learning. What do you think that means? It is a learning methodology that uses all of your senses as well as your emotions and your critical thinking skills. If you can remember your kindergarten or elementary school classrooms, you will see many colored maps, letters and numbers, bold (even raw) drawings by each child, etc. You learned the alphabet by singing. You learned the multiplication tables by saying them out loud with each other. You laughed a lot. You were creative.

Then, how you were taught began to change when you entered middle school or high school. Learning became more lecture, more black and white, more rote. You studied before tests and probably did well or maybe not. Yet, for all the endless homework and “cramming,” most of the information you learned in high school you don’t remember now. That’s because it went into your short-term memory so that you could pass the tests and move on to the next grade.

Yet, look at all the things you remember from early childhood! While in elementary school, much of the information you learned went directly to your long-term memory, because it was peppered with music, color, movement, smells, emotional experiences, and lots of play and fun.

The methodology we use in this book in many ways parallels how you learned in grade school. We do this by accessing the part of your brain where long-term memory lives. Now, the way to reach your long-term memory has to include emotion, because they reside in the same place in your brain – the limbic region.

The truth is, because of the way we humans learn, we have to discover something ourselves to really learn it. This book, based on Educational Discoveries’ flagship seminar, is designed so you make dozens of discoveries. In short, you will learn a college semesters worth of accounting in the time it takes you to interact with this book.

This is quite a reversal, because business people and students have over the years found the subject of accounting quite difficult to master. Many have simply given up in frustration, others have decided to leave accounting to the “experts.” This book is for all of you who have hated accounting, had difficulty learning it, or ever thought you didn’t really “get it.”

We think that most attempts to teach accounting fail because of too much attention to details and a failure to present the big picture framework of how it all works and fits together. In this book, we promise not to overburden you with details and to focus on what are really the key concepts of accounting that any businessperson needs to know.

You will learn the structure and purpose of the three primary financial statements – the balance sheet, the income statement, and the cash flow statement. You will learn how these fit together and their interrelationships. You will also learn the basic language of business-concepts like cost of goods sold, expenses, bad debts, accrual vs. cash methods of accounting, FIFO and LIFO, capitalizing vs. expensing, depreciation, and the difference between cash and profit.

Our promise is that you will get all this information in a fun and easy way that allows you to participate, interact, and discover all that you need to know. Many people need to have understanding and confidence in working with financial concepts, but are not ever going to be doing accounting details. If that is you, then this book fits that need, too. It is set up so that you can actually do financial statements as you are learning them. We invite you to “play the game” as you interact with this book.

Understanding all this information is nice, but what do you do with it? The final chapter will give you some tools for analyzing financial information and making better decisions for your company and your career.

As mentioned, the information in this program has been developed by Educational Discoveries, Inc. since the early 1980s in our one-day seminar, The Accounting Game. The program was originally created by Marshall Thurber at the Burklyn Business School in the late 1970s. Nancy Maresh, a student at Marshalls school, then took the program and developed The Accounting Game seminar. We offer our heartfelt thanks for their original genius and commitment to bringing this extraordinary program to life. We also want to thank all of the somewhere between 75,000 and 100,000 people who have attended our public and private seminars for the fun they have been and for the insights and suggestions that have helped us improve the teaching of this information. Thanks to them, The Accounting Game is the most successful financial seminar in the world.

So, enjoy! Because if you enjoy this book, you’ll learn more in a brief time than you ever imagined possible.

And some programs from Intuit:

• Quicken Premier 2007. A complete personal finance software priced at $79.99$69.99 (free shipping).
• QuickBooks Simple Start Edition 2007. The cheapest program for business financial accounting, only $99.95.