Everyone needs to "speak" accounting - it's the blueprint of the organisation
Accounting Made Easy's Mark Samowitz: People aren't bad at accounting - they are merely taught badly.
Mark Samowitz, CEO of Accounting Made Easy, is a singer by night. Before he trained over 15 000 people in accounting literacy, he pursued a musical career in the US. It’s his special blend of creativity and a background as an accountant that made his training in Ballroom 4 at the Finance Indaba 2018 so compelling.
Mark is a visual thinker. He held up a pair of scissors to symbolise the income of a hypothetical hairdresser. He then held a R20 note next to these scissors and showed that payment for the haircut may come before the haircut happens, straight after the haircut, or via EFT the next day.
Most people would say that income is actual money in the bank account, but Mark says that income is the value of the service rendered. “For non-accountants, this is quite mind blowing. Accountants know this, but they don’t explain it like this, and the misconception persists,” says Mark.
He explained expenditure – a simple accounting concept that floors non-accountants – visually. Mark held up a R10 bottled water and an empty cup. He poured the water in a cup and explained that the expenditure of this water can be measured by the value it gives and not how much the water cost.
“An income statement is therefore service rendered, less usage. Often cash flow and profit are confused,” said Mark.
Mark and his team are spearheading accounting literacy education because “a budget is the blueprint of the business and everyone needs to ‘speak’ accounting.” He explained that his course is not to teach accountants the fundamental accounting concepts (they all know them), but to teach them the skills to empower non-accountants with sound accounting knowledge.
“Through our course, we create an accounting language that everyone can speak.”
The top misunderstood accounting terms are: balance sheet, asset, debit, credit, income statement, income, expenses, profit, general ledger and financial year-end. “An asset is NOT something that is completely paid off, but actually something you control. You may not own your asset, but it’s an asset,” said Mark. Credits can be up and down; debits can be up and down – who knew?
Mark pulled out an income statement toolkit. It looked like a simple pamphlet, but had moveable and 3D parts. He compared this toolkit to the dense material found in accounting textbooks and urged the audience to consider that the YouTube generation needs visual cues to learn.
“If you hated accounting at high school or at university, it’s not because you’re bad at it, it’s because you were taught poorly.”