Tales of Debit and Credit

Wonder why we cry when there’s a bad scene on a movie? It’s because of verisimilitude. Verisimilitude (noun): The appearance of being real. We cry not because the movie is bad (hopefully not) but because there is life in the character to the point that you can feel its pain. When approached by a friend who shares a problem that we can relate to, we lend our ears and give them our own advice, even we extend their comfort and all levels of understanding to solve the situation.

Most of the time, when reading accounting textbooks I easily adapt with the theories just by linking them with how relatable they are in real life. Of course, accounting is not as comprehensive as a novel given that one can’t easily grasp jargons in one reading. With an ounce of patience, a pack of understanding and tears here are six notable adages gained from reading Basic Accounting.

1. Present Value will not be equal to your Future Value

            -Through experience we can grow as a person, through cumulative education, our minds become more open as individuals. This is why what we had in the past cannot be what we are in our present and will be in our future wellbeing. Learning and Living is a continuous process that will enhance our self-esteem. Have you had an ex-friend? Look back on what you were before, during, and after your relationship. Sure you are the same person but a relevant value for choosing what’s right for the both of you.

2. Depreciation DOES NOT apply to People*

Credit to owner

            *Applies with added authenticity. Have you read the story The Velveteen Rabbit? Story goes with this link. People do not depreciate when they are living the life to the fullest. Relationships connect people by going through life together and sharing each encounters co-independently. As humans, we are prone to mistakes, which leads to disappointment and frustration. As humans, we also develop by our own solutions to every obstacle. If there is an exception to this rule “how does one depreciate?” By simply not trying at all—to the point of “preserving” one’s heart by not having it broken.

3. The company has a different personality from its owners

            -The “Separate Entity Concept” in Accounting has its own toll in the real world too. In Accounting, an entrepreneur’s business funds and personal savings are different transactions; it also applies with their expenditures and taxes. Never can they be combined because an entity is another person according to law. Real talk, when we have secrets. Some matters can be discussed within family matters, some are shared within friends or colleagues, and a few are spoken to acquaintances or strangers. Another application goes with when we are organizing our petty cash at home. Some goes for emergency, medicine, travel, utilities, and investment. It’s a must to have a separate compartment for each petty cash.

4. A person’s assets can come from others or within you

            -No one starts as an expert. To have an asset, you must first have a capital, which can be a form of money, property or service. Investments are also your capital, but not all of them are considered an asset. An investment can be potentially an asset. Real life investment such as your skills, talents, and expertise can be monetized when applied to practice and enhanced or maintained regularly. Character is another important factor

5. Adjustments are necessary. Life entails estimates

            -Life is not always a 100%. Sure you have the capacity to assume or predict your future but it won’t be as accurate if historical events are your evident basis. Adjusting might be the hardest lesson in accounting and in life as well. There are errors, unrecorded transactions/conversations, fortuitous events but all accountants must do is to analyze the situation, apply proper adjustments, and reconcile. Estimating is a form of adjusting for the future so that one is ready when uncertainties happen (or to at least, refrain from having your asset undervalued.)

6. Beginning a year do not necessarily have to always be on or after December 31.

            -If you can start now then why wait for the date? Exhibit A: If given the chance to turn back time, I’d start blogging since high school. In real life I have my own heads up to blogging when I graduated from an All-Girl’s Catholic school. Lesson? Waste no time—if you have enough capital, investment, or knowledge to start up something big then do it now. Time is your biggest treasure that must never go to waste.

            Wisdom cannot be learned through one sitting. It has to be experienced—or has gone through a process before getting the right answer. Likewise, Accounting has wisdom imprinted on its “books.” Whether you are an accounting major or not, you will notice that you cannot learn it in one reading. The Accounting standards might be revised or improved annually, but the morals remain the same: you can only find the answers when you have the right mindset and the heart to seek the proper attitude in solving problems.

Special Thanks to contributor Rica Mae Rosales!

   LOVE Michelle Tan

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