24
Jul
11

Lessons on Accounting

Last Friday I gave an accounting training to a group of students who attend my borrower’s tailoring school. In fact, a lot of my work here centers on accounting. Many don’t do it at all, while most others only do a partial job. The most common technique seems to be keeping a receipt book and then totaling revenue at the end of each month, which is not enough.

The tough part is finding the right balance between having enough information and being overly complicated. My current preferred method is focusing less on the actual act of accounting and instead trying to be interactive and use a story or example to emphasize the need for accounting. For example;

Why do we do accounting?
It’s keeping score in business. It’s like playing a soccer game where there were many goals but never writing down which team scored them. How do we know who won at the end of the game?

What do we need to keep track of?
I asked the class for a list of all of the costs that go into making a custom shirt order. They answer with fabric, thread, buttons, etc. I then ask about their time. What if that custom order includes intricate embroidery? It will take more thread, but also a lot more time, which must be taken into account. Also, it’s rare for someone to remember to include their indirect costs of rent, utilities, or depreciation of assets (such as their sewing machines).

Check out a few photos from the training, and see what I have to do when we do accounting by hand rather than with Excel (that hand-drawn table is huge though, right?)

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The opinions on this blog are only those of the author, and and do not reflect any position of the U.S. Government or the Peace Corps.