Home Accounting Restrictions
Dear Habrachiteli.
In the comments to the topic , the topic of accounting and financial monitoring was discussed, with reference to home accounting.
I happened to be engaged in a long time to simplify the methodological part of accounting, in order to bring it closer to a common understanding.
In this article I want to share this experience, and I will try to systematize what limits personal and home accounting systems in opportunities.
The primary function of full accounting can be indicated by the following phrase:
control and analysis of the financial condition and results of economic activity. This allows you to make a triad of reports : balance sheet, income statement, cash flow statement.
Within one article it will be impossible to tell in detail about these reports, and this topic is too special, so we omit it and try to answer the question: why is it impossible to perform the primary function of full accounting in home and personal accounting systems?
In my opinion, the answer is quite simple. To obtain a full result from accounting, two main methodologies are used in accounting: Double entry (double-entry accounting system) and accrual accounting principle. These methodologies were invented byaliens who are very intelligent people and cannot be understood by mere mortals of this type. And if anyone understood, everything is so sophisticated there that it may seem at least ridiculous to keep household accounts according to these principles.
It remains to take into account what is clear and what you can touch with your hands - money.
In the overwhelming majority of home accounting systems, income and expenditures mean the arrival of money and its payment. To control, it is possible only the status of money in the wallet and accounts. Any development of the functional towards full accounting makes the system difficult to understand and incomprehensible.
As money is only the equivalent of value, so accounting based on registering only cash flow is equivalent to this accounting.
In reality, it is just as important for every person, family, entrepreneur, or small business to control its financial condition as it is for big business. The methodological complexity of the process of obtaining these data is the cause of the main limitation of all home accounting systems, namely, the impossibility of full control over the financial condition.
For the sake of fairness, it can be said that often large-scale enterprises also build their own accounting on a monetary basis (accounting for only cash flows).
Long before Italians had dawned on the double bookkeeping five centuries ago, people kept the so-called inventory records. (All new is well forgotten old).
A little example from my practice.
About eight years ago, one of the employees who worked at my car electronics installation center, I decided to become an entrepreneur and opened my tire service. After six months, he approached me and asked for help with the organization of the accounting: “I don’t understand anything. I write down where I spend money. I write down all the money I earn. Consumables. I take money into the family. Credits. Machine tools. I spend a huge amount of time writing, but I don’t understand anything. I do not understand how much I earned and whether I earned at all. ”
In the words of one of my friends, while he himself was not in the business “You take a large notebook (computer) and you start recording everything there. Accounting is easy! ”
But the former employee received other recommendations from me, which he still uses today:
1. Stop keeping meaningless records and spend time on it.
2. Sit down tonight and count everything you have, namely: Money (in your pocket, wallet, on the account, on a card); plus Values ​​(property, apartment, car, stocks, furniture, machinery, consumables, goods, etc.), estimating roughly at the price of possible sale at the moment; plus debts that you owe (advances to employees, loans issued, arrears of the employer, etc.); and minus the debts you owe (loans in a bank, employees of the RFP, loans from friends, etc.). The amount received is your financial condition.
3. Put the sheet with the calculations in a secluded place and do not waste time writing where you spend and where you get the money.
4. A month later, on the same date, sit down and make a new calculation (see paragraph 2).
5. The difference between the obtained financial conditions is the most correct result of your life over the past month.
6. Do this calculation monthly.
7. Consider analyzing, i.e. the answer to the question: why has the financial condition improved or worsened? But here, at least, it is necessary to deal with the principle of accrual. But if the result is satisfactory, there are no mega tasks to improve this result by an order of magnitude; if there is not enough time, then you should not take into account income and expenses.
Practically, I advised him to take into account, which was conducted in ancient Egypt.
The resulting report is actually the inventory balance. The result of economic activity obtained by comparing inventory financial conditions takes into account all possible hidden incomes and expenses (change in the value of property, change in exchange rates, change in the value of debts), and therefore should be considered the most correct.
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A small example showing the extreme insufficiency of accounting for only the receipt and expenditure of money:
Suppose a young man has a monthly income of 50,000 rubles. Parents gave him money and he bought a car for 1 million rubles. He writes down in detail where he spends money. At the subconscious level, he tries to ensure that his costs do not exceed revenues (positive total cash flow). Thus, by accounting, he keeps his expenses within 50,000 rubles.
Three years later it was time to change the car. Our hero discovered that he could sell it for 600 thousand rubles. The question is, need money for surcharge to the new car. Our hero in the accounting based on the monetary basis did not take into account the decrease in the cost of the car over time, since this is already an accrual of expenses, and does not take into account the monetary basis of this.
Periodic inventory accounting helps to avoid such situations always, and in most cases is sufficient as a personal account and even in small business.
In any case, start accounting is always necessary with him! Then the accounting procedure itself ceases to be similar to “accounting for the sake of accounting”.
In order for more people to use home accounting systems, it is necessary not only to make it more convenient or to increase its functionality. It is necessary to create a new value for the consumer so that accounting could combine the simplicity of the monetary basis with the usefulness of double entry and the accrual principle. To do this, it is necessary to defeat the main constraint, namely, the methodological complexity of the accounting process.
PS Dear harabrachiteli. This article has been tasked with only identifying the problem. And I only partially answered the question: how to solve it? If you have questions regarding the topic, I’m happy to share my experience. Write in the comments and in PM.
In the comments to the topic , the topic of accounting and financial monitoring was discussed, with reference to home accounting.
I happened to be engaged in a long time to simplify the methodological part of accounting, in order to bring it closer to a common understanding.
In this article I want to share this experience, and I will try to systematize what limits personal and home accounting systems in opportunities.
The primary function of full accounting can be indicated by the following phrase:
control and analysis of the financial condition and results of economic activity. This allows you to make a triad of reports : balance sheet, income statement, cash flow statement.
Within one article it will be impossible to tell in detail about these reports, and this topic is too special, so we omit it and try to answer the question: why is it impossible to perform the primary function of full accounting in home and personal accounting systems?
In my opinion, the answer is quite simple. To obtain a full result from accounting, two main methodologies are used in accounting: Double entry (double-entry accounting system) and accrual accounting principle. These methodologies were invented by
It remains to take into account what is clear and what you can touch with your hands - money.
In the overwhelming majority of home accounting systems, income and expenditures mean the arrival of money and its payment. To control, it is possible only the status of money in the wallet and accounts. Any development of the functional towards full accounting makes the system difficult to understand and incomprehensible.
As money is only the equivalent of value, so accounting based on registering only cash flow is equivalent to this accounting.
In reality, it is just as important for every person, family, entrepreneur, or small business to control its financial condition as it is for big business. The methodological complexity of the process of obtaining these data is the cause of the main limitation of all home accounting systems, namely, the impossibility of full control over the financial condition.
For the sake of fairness, it can be said that often large-scale enterprises also build their own accounting on a monetary basis (accounting for only cash flows).
What to do?
Long before Italians had dawned on the double bookkeeping five centuries ago, people kept the so-called inventory records. (All new is well forgotten old).
A little example from my practice.
About eight years ago, one of the employees who worked at my car electronics installation center, I decided to become an entrepreneur and opened my tire service. After six months, he approached me and asked for help with the organization of the accounting: “I don’t understand anything. I write down where I spend money. I write down all the money I earn. Consumables. I take money into the family. Credits. Machine tools. I spend a huge amount of time writing, but I don’t understand anything. I do not understand how much I earned and whether I earned at all. ”
In the words of one of my friends, while he himself was not in the business “You take a large notebook (computer) and you start recording everything there. Accounting is easy! ”
But the former employee received other recommendations from me, which he still uses today:
1. Stop keeping meaningless records and spend time on it.
2. Sit down tonight and count everything you have, namely: Money (in your pocket, wallet, on the account, on a card); plus Values ​​(property, apartment, car, stocks, furniture, machinery, consumables, goods, etc.), estimating roughly at the price of possible sale at the moment; plus debts that you owe (advances to employees, loans issued, arrears of the employer, etc.); and minus the debts you owe (loans in a bank, employees of the RFP, loans from friends, etc.). The amount received is your financial condition.
3. Put the sheet with the calculations in a secluded place and do not waste time writing where you spend and where you get the money.
4. A month later, on the same date, sit down and make a new calculation (see paragraph 2).
5. The difference between the obtained financial conditions is the most correct result of your life over the past month.
6. Do this calculation monthly.
7. Consider analyzing, i.e. the answer to the question: why has the financial condition improved or worsened? But here, at least, it is necessary to deal with the principle of accrual. But if the result is satisfactory, there are no mega tasks to improve this result by an order of magnitude; if there is not enough time, then you should not take into account income and expenses.
Practically, I advised him to take into account, which was conducted in ancient Egypt.
The resulting report is actually the inventory balance. The result of economic activity obtained by comparing inventory financial conditions takes into account all possible hidden incomes and expenses (change in the value of property, change in exchange rates, change in the value of debts), and therefore should be considered the most correct.
')
A small example showing the extreme insufficiency of accounting for only the receipt and expenditure of money:
Suppose a young man has a monthly income of 50,000 rubles. Parents gave him money and he bought a car for 1 million rubles. He writes down in detail where he spends money. At the subconscious level, he tries to ensure that his costs do not exceed revenues (positive total cash flow). Thus, by accounting, he keeps his expenses within 50,000 rubles.
Three years later it was time to change the car. Our hero discovered that he could sell it for 600 thousand rubles. The question is, need money for surcharge to the new car. Our hero in the accounting based on the monetary basis did not take into account the decrease in the cost of the car over time, since this is already an accrual of expenses, and does not take into account the monetary basis of this.
Periodic inventory accounting helps to avoid such situations always, and in most cases is sufficient as a personal account and even in small business.
In any case, start accounting is always necessary with him! Then the accounting procedure itself ceases to be similar to “accounting for the sake of accounting”.
Conclusion
In order for more people to use home accounting systems, it is necessary not only to make it more convenient or to increase its functionality. It is necessary to create a new value for the consumer so that accounting could combine the simplicity of the monetary basis with the usefulness of double entry and the accrual principle. To do this, it is necessary to defeat the main constraint, namely, the methodological complexity of the accounting process.
PS Dear harabrachiteli. This article has been tasked with only identifying the problem. And I only partially answered the question: how to solve it? If you have questions regarding the topic, I’m happy to share my experience. Write in the comments and in PM.
Source: https://habr.com/ru/post/119768/
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