Numbers People in Action: Accountants & Bookkeepers
August 10th, 2009
Copyright © 2009 Integrated Profitability TM
A continuation of the suggestion that came in to “…include a simple but meaningful scenario which you’d have the three Numbers People work through to posting, reporting and interpretation and planning…” The first article set up the simple scenario.
With the business model articulated, Accountants step in. Their job is to determine what all the different transactions mentioned or extrapolated from the Business Plan are–from a financial, general ledger perspective. This determination automatically dictates, in the accounting world, how these transactions need to be booked. The accountant will lay out treatment for both the Income Statement (revenue and expense) and the Balance Sheet (assets, liabilities and capital).
For example,
● buying the snacks is an expense
● selling the snacks to harried hungry people is revenue
● if you pay for the snacks with cash, the warehouse trip will decrease cash (an asset) and increase inventory (also an asset)
● if you pay with a credit card, the warehouse trip will increase your credit card debt (a liability) and increase inventory (an asset)
Isn’t double-entry accounting awe-inspiring?
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