The Three Questions
Every business asks three key questions:
• How much money came in?
• Where did the money go?
• How much money is left?
The answer to each question can come only from the practice known as accounting. Like other practices such as medicine and law, accounting has its own vocabulary. In many ways, accounting is the language of business.
Accounting can become quite complex. It has a high MEGO factor. MEGO stands for that state of mental saturation when “My Eyes Glaze Over” in stupefaction. An exasperated student was once overheard complaining, “Who ever thought addition and subtraction could be this hard?”
Whatever your responsibilities are in your business or organization, you need accounting skills to perform at your best. If you are in sales, you learn your product’s features and how to show them to buyers. Those features include the cost or value proposition and how it affects your customers’ buying decisions. Marketing managers study how to find and appeal to a product’s target groups. Working up price points can mean some detailed cost analysis. Production managers learn how to plan workflow to control costs. Senior managers use financial statements to speak to those outside about their business’s prospects.
Whatever your management level, you need to know accounting because your decisions will often be determined by “the numbers.” That is how managers keep score and are graded. That’s why you bought this book and that’s what we’re going to give you. Fasten your seat belt. We’re taking off!