Some CEOs and COOs may appear to have rudimentary accounting knowledge, but deep down, some of them could probably take a refresher course, according to professor Charles J. Pendola. The teacher has spent more than 40 years teaching, and he has come across some very humorous definitions for basic accounting words.
Pendola notes that basic accounting knowledge does not substitute for in-depth understanding of the concepts and terms needed on an everyday basis. When students in some of his classes were asked to explain certain accounting words, some extremely humorous definitions emerged.
The most basic word related to the industry, accounting, means the recording, classifying and interpreting of financial data. However, some students felt this word should be defined as "how to count." A few students thought an asset in accounting knowledge meant someone's personality or good looks. Instead, an asset is something of value owned by a company or individual. A fixed asset was not previously broken, as this term defines a long-term tangible property used by a firm over and over again beyond a single year.
A balloon payment does not refer to using inflatable balloons as a method of payment. This term means making one lump sum payment towards the end of a loan to satisfy the debt. Collusion is not a misspelling of collision; it is a secret agreement among two or more parties to undertake an illegal activity. Likewise, EPS is not a disambiguation of ESP or ESPN; this abbreviation means earnings per share.
A compensated absence, to some, talks about paid vacation from work. In accounting knowledge, this refers to a worker's right to a future reimbursement for services previously rendered. Kiting does not refer to flying a kite. Instead, this is the term used for writing a check on one bank account to cover the shortage of another account. Turnover is not a fruit pie made of apples or cherries; this refers to how many times an item, such as a finished product, is replaced by a company.
Similar to funny definitions of standard terms, some accountants should never say certain things to clients when dealing with business professionals. When a client signs a contract, an accountant shouldn't say "just sign your life away." Clients need to know precisely what value-added services they get from an accountant. Likewise, a professional would never say "nobody works for free," especially around tax time with plenty of firms looking for new clients.
The reason accountants should understand basic definitions revolves around the need for consistency among industry principles. When one person talks about an unqualified opinion versus a qualified opinion, the person on the other end of the conversation should know the difference.
Every industry has a humorous side, and accounting knowledge should be no different. So long as the jokes do not extend to affecting a client's confidence, humor should remain on the inside and be used in a professional manner.
Photo courtesy of jannoon028 at FreeDigitalPhotos.net