I’ve been asked many times, “what is the best learning tool that an accounting student has in their arsenal”. When I’ve proposed this question to other modern accountants, they generally list out the programs they utilize most, Quicken, Excel, or the Intuit program du jour; all are cited as the best learning tools for the future accountant. My own response to this question may surprise anyone that has become an accountant post-1995, but would not shock the pre-computer group. While I am a member of the older crowd (by age), I am a new accountant in that I was not accounting professionally prior to 2000. So what tool is most important to me? What one piece of equipment is in my arsenal and is the most dangerous weapon in the accounting world? An abacus? Though I can use one and suggest everyone learn, not the most important tool. A Burroughs Sensitronic with magnetic tape to store ledger cards? Close, but again no. What, what, what apparatus is so important?
A recent IRS Notice of Deficiency was sent to Joseph D. Scully, Jr. requiring him to pay additional tax, fines and penalties of $26,000 for a three period. This case was resolved in the U. S. Tax Court for an amount approximate to what the IRS was seeking. The main problem appears to be one that many of us have trouble with, lack of consistency. We all start out with good intentions, but over time, appointments, disorganization, forgetfulness and finally abandonment of your record keeping can occur. This is a problem that happens to many business owners and when it happens to a 501c(3) entity it can have even worse ramifications than fines and penalties, it can lead to possible revocation for failing to follow IRS code or for private benefit/inurement infractions.
The top five issues that occur with deductions are:
1. Stated business purpose is nonspecific or completely omitted
This generally occurs...
As accountants how do we teach the young/new learners coming into our field the evils of unethical behavior? You would believe that the recent examples of Bernie Madoff and the Enron executives are the best cautionary tales to someone making the choice between fraud and honesty, but the reality is different. Most swindlers never consider themselves criminals and many perpetrators of fraudulent acts start small, as did Madoff, and justify their actions through rationalizations. Over time the deceit grows to a size that the criminal can no longer hide. Enron did not start out with the hundreds of Special Purpose Entities (SPE’s) they collapsed under; they began with one and grew. Scholars have dedicated vast amounts of time trying to answer my initial question. Colleges offer courses in business and accounting ethics in an attempt to keep new entrants into the white collar world ethical, yet the problem of business fraud continues to grow. Perhaps it is not the education that is failing,...
MP3 players example
The profit in millions of dollars for an MP3 player can be done with the polynomial P=-4x^3 + 12X^2 + 16X. X represents the number of MP3 players produced annually. The company currently produces 3 million MP3 players and makes a profit of $ 48,000,000. To figure out the least amount of MP3 players the company can produce and still make the same profit we need to solve for P.
Set P=48 This represents the total profit. 48=-4X^3 + 12X^2 + 16X
Step 2 subtract the 48 from 48 and from the end of the equation, like this 48=-4X^3 + 12X^2 + 16X - 48
When embarking upon a new subject, it is good idea to be reasonable about your goals and aspirations. This is especially true in accounting. In addition, remember to learn one side of the subject at a time. For instance, we always ask for directions, and hope to get the fastest and most accurate ones. Therefore, you would never understand or remember directions that were given to you from both sides. Yet, in accounting, many good textbooks or even teachers try to do this to you.
For example, you need only to understand the side of each account that increases its balance, and in accounting that would be either a left side for a debit, and a right side for a credit. Why textbooks and students emphasize learning about the way both sides increase or decrease doubling the amount of information you need to memorize, and confusing the student is beyond me or my 22 years of teaching. It would be like giving someone directions from both sides. For example, first go to the front door,...