#Accounting - Accounting requires organization, not advanced math...

Question

I want to study accounting but I'm afraid to do it because I'm not good at math. What are your thoughts?

Answer

The good news is that accountancy rarely goes beyond basic arithmetic (adding, subtracting, multiplying, dividing). In fact, accountancy is far more about organizing and classifying information rather than manipulating it. 

Analysis

As a for instance, let's take a sample transaction and look at how an accountant would treat it.

Stan's Superheroes (a store specializing in superhero collectables) sold a Baitman figurine (it's a knockoff of Batman - this one is of a cowled fisherman who fights crime on the docks) for $10. The customer paid cash. Stan originally bought the figurine for $3. How do we book this transaction?

And now let's watch how an accountant works through this question.

• Cash has increased by $10, so the account Cash is increased (Debit)
• Sales have also increased by the same amount, and so the account Sales is also increased (Credit)
• The inventory has decreased by the amount originally paid for the figurine, and so it decreases by $3 (Credit).
• The last account, which is the Cost of Goods Sold, increases by $3 (Debit).

Accountancy also gets into reasonableness. For instance, would it be reasonable to conclude that Stan's Superheroes makes $1,000,000 per year from sales of Baitman? Probably not - and it's the role of the Auditor (a type of accountant) to examine those types of situations.

Bottom line, most accounting does not involve anything more than basic math. If however you are interested in stretching your math muscles within the accounting world, Cost Accounting might be for you (it's a type of managerial accounting that does it's best to examine a business from top to bottom, in all its processes, and put them into financial terms so that the management of a company can make better business decisions).

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Questions and comments welcome!