Snowflake wrote the following post at Thu, Jun 3 2010 7:47 AM:
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Free market accounting would look like this: cash in - cash out = profit. As a summer intern, I ran economic analyses on my projects and it was basically what everyone in the company does to assess the profitability of projects. The accounting people seem to just be there to keep books for government, since accounting is bogged down with all sorts of philosophical rules, like conservatism and ‘full disclosure’. See GAAP."
You obviously don’t know anything about accounting. In order to know if a potential project is worth the invesment management needs to know if it will be profitable and what type of return on investement it will provide. Accountants provide this information. Applying for a loan? How is a bank going to know if you will pay them back? Accountants, that how!
Yes, some of what accountants do is find out how pay as little as possible in taxes. That makes it a good field for libertarians. And don’t worry about government going away in our lifetimes. It isn’t happening. But let’s say it did. There would still be plenty of jobs for hard working accountants, probably even more so than now because there would be more businesses than every before that would need to keep their books in order.
Well the ‘cash balance’ i put forward was an instantaneous one rather than over time. So bla bla discount rate bla bla time of different capital expenditures. It all goes into an equation and /yawn.
You have to be familiar with the mechanics of the investment though. This is why my old company has engineers running the profit analysis instead of accountants.
Using their awesome psychic powers? There’s probably a formula somewhere that you can just put a person’s financial variables into and it will pop out the expected profit from loaning to this person.
What if America sux so bad you gotta leave and the GAAP doesn’t apply anymore? Sorry but I am completely failing to see the utility of learning how to be an accountant. All you need to know is math, and all the accounting people i’ve ever met have been drunken frat boys trying to get a job at one of the ‘big 5’ accounting firms, which only exist to absolve corporations of liability when inevitably the government attacks them for screwing their books up (un)intentionally.
Come to think of it, I know for a fact that 90+% of all oilfields in the world have fudged books. But its useful. The field hands keep a little extra oil in reserve (honey) so that if something goes wrong, they can report a days worth of normal production and have time to solve the problem without the home office breathing down their necks.
Snowflake, you show your ignorance, and it is abundant. Who prepared the financial statements so these engineers could analyze the profit? Sure, there are programs that analyze ROI, but you need to understand the inputs. GAAP aren’t the only standards. Internationally there are IFRS. There will always be a need for accountants. You need to do a lot more research before you babble such nonsensical malarkey.
Also, you can’t apply “what if,” doomsday scenarios when making plans and goals for the future. Life is too short to worry about what could happen.
We are talking about what degree someone should PLAN to pursue.
Is it not true that a good deal of an accountant’s time is wasted on government compliance rather than more fruitful business pursuits?
The degree to which a business utilizes accounting principles and philosophy is different for each specific business or industry. Some businesses or industries use it a lot, some none at all except for the government compliance activities and the minimum amount of reports (P&L, Cash Flow, etc.).
In many cases, the amount of effort expended on government compliance (especially since the Sarbanes-Oxley Act) is greater than the productive business effort.
Simple fact is that even with no government regulations, there is a need for accountants, although they would probably be self-regulated rather than qualified as a CPA (or the various state-imposed requirements). How large of a demand for this specialty remains to be seen, however. The removal of the restrictions on the profession are also likely to impact the restrictions on the employer that make these positions mandatory.
"@spidey
Why do you believe businesses only use accounting methods because of government?"
Um, I don’t. Did I say that?
K.C. Farmer,
Yes, unfortunately that’s the world we live in. I’m sure there’d still be record keeping, even for the little guy. Of coarse it’d be much easier for them to do it all on their own using whatever method they’d like, not having to report it to some bs agency for taxes. So, yes this world sucks and it’s because of you fellow man for voting in the first place. Gas would probably cost 20 cents a gallon if there was no dept. of energy restricting drilling.
Nuclear fision would make energy abundant and electricity would cost maybe 5% what it costs today. Anyway, at least we can still whine about it on the internet. They haven’t taken right away, yet.
@ spidey
Not sure what you meant but I quote “YES to engineering! Not so much to accounting… it basically only exists bc the government does.”
My apologies to spidey, I guess it’s snowfalke who said that. I keep getting you two mixed up