Feedback on intro accounting article?

l@@ks good to me Jeff....I like it...

looks good -- BUT would an engineer actually be able to read a financial statement with any degree of sophistication after reading your article. i think not! hence, your article is quite worthless from a practical perspective.

i suggest reading one of the standard MBA textbooks on the subject.

Thanks Eliza and Beancounter for the comments...

Eliza, your comment made me realize I wasn't clear with my intentions... It wasn't my goal for an engineer to be able to read a financial statement, just understand the math behind them. The article grew out of my frustrations understanding this "Debit & Credit" thing as well as the *basic* reasoning behind tax issues of inventory, expenses, and depreciation.

Currently, I don't feel I have an understanding myself of standard accounting "reports". Maybe when I do I will write another article.

I will think about trying to make my intentions in the article more clear.

Thanks!

-Jeff

As an engineer, I have to ask what do we have to do with it? Seems like a generic description for most anyone to me...

I would have simplified the definition for debits and credits to:

Debit = Left side

Credit = Right side

Which side an account increases or decreases on depends on what type of account it is.

only an engineer/math geek would write formulas to understand financial statements. most normal people learn to read financial statements like they would read the newspaper; read by experience.

you do not explain how to read a newspaper by writing down an equation to explain the organization and column structure of the newspaper, would you? it's just silly...

"reports". > Maybe when I do I will write another article.

Your best bet is to buy a good MBA level accounting textbook that explains it all in plain language. But it's a complex business. Go to any large B school web site (stanford, columbia, harvard, wharton, ...) and you will see people with PhDs who spend their entire lives studying how to decipher the nuances of financial statements.

Then they're missing out on a very useful tool...

no, fact is, i already understand all your equations better than you do AND i know how USELESS they are if you want to really understand financial statements.

those equations, while true, do not tell you anything more about a set of financial statements than knowing the measurements of a woman tells you about her

personality.

don't kid yourself. financials cannot be reduced to summary equations.

"As an engineer, I have to ask what do we have to do with it? Seems like a generic description for most anyone to me... "

Yeah, it's a bit of a stretch, but a title of "Double entry accounting for those who understand algebra and logic, and need to have a basic understanding of fixed assets and inventory" didn't have much of a ring to it.

Feeling punchy, I've thought about "Double entry accounting for those who won't drink the debit & credit kool-aid without knowing what's in it."

-Jeff

"I would have simplified the definition for debits and credits to:

Debit = Left side

Credit = Right side

Which side an account increases or decreases on depends on what type of account it is. "

Joe, it is accurate to say you are approaching this from the perspective of notation in a T account? Another accountant I spoke with seemed to have a similar issue with my definition of debit & credit.

While I can see your point, I think for the purposes of conceptual understanding for someone looking at this from the perspective of

It might be good to add a section on T account notation to see how the debit and credit terminology really works for bookkeeping.

Am I understanding your concern?

Thanks!

-Jeff

Oooh...found a sore point did we? :)

I said nothing about whether there was any _particular_ usefulness or not to the particular set of equations or presentation--you have no way of knowing what I might think of that as it wasn't mentioned, either.

I only commented to OP that it didn't seem to have much correlation to engineers in his paper so wondered why he chose the title...

I'll only note that while in uni I took a couple of econometrics courses as electives--it was having the math background that allowed me to keep up with the non-physical- science-major types: they didn't have a clue on how to do the calculus and algebra and I could go read the econ in an evening... ....