In financial accounting, we are required to identify what kind of transactions should be placed in direct expenses; you need to also understand that there are different types of loans/debts. The only official loan I know is the one I get from the bank, and who would have thought that it would be categorized under other categories. The other two loans/debts that I know are the ones that I get from my friends, and the loan that I get from my dad, well primarily to pay off my first loan. The advantage that I have in the second type of loan is, my dad doesn’t try to blackmail me through denial of invitation to group parties.
How about looking at the picture in another way: the money I get from my friends is more of debt one that I have to definitely pay off irrespective of my personal balance sheet, where the liability factor definitely outweighs the asset factor. These people don’t listen to the fact that my cash in bank and cash in hand are next to zero and my net worth is only based on fixed assets such as the car that I bought last year and still don’t have with me in this city and hence is immovable fixed asset. Additionally, I try to gather goodwill as an asset, though right now I don’t remember if it goes under asset or liability, pardon my memory, it has suffered some shock and awe today.
As against the actual Profit and Loss account, which contains terms such as outstanding wages, my personal balance sheet mostly contains outstanding payments to mess and outstanding payments to the Dhobi. My profit takes place mostly when there is a treat awarded by colleagues and I mostly hope for a provision of bad debt from their end when it comes to my turn to treat them.
Coming back to my financial accounting papers, I was glad that I understood the first few lines of the paper which read, “Financial accounting paper for First year students, 3 hours duration, 60 marks and so on”, but after all that it was in German or Japanese with some numbers thrown in for fun. So obviously I thought that this must be a mistake, this can’t be the exam that I need to write. I had studied hard for it. I had studied one full night for this subject. Compared to the attention that I have paid in the class and the studies I have put in other subjects, this was one of the subjects that I had spent a lot of time for. Once again, ONE FULL NIGHT, of course I also grabbed a 7 hour sleep right after the midnight snack, but then that is beside the point. And I finally decided to raise my hand to ask the faculty member if he had made a mistake distributing the question paper (they are bound to make such mistakes, obviously!!). But as I was about to raise my hand, I deciphered, another line which read, “Take suitable assumptions wherever necessary”. This got me thinking, what kind of assumptions are we talking about? So began the exercise at which I am a pro.
I began developing new theories and formulas. The Einstein (or who ever is the equivalent to Einstein in terms of Finance) inside me awoke and I devised that liability and assets are equal and are interchangeable. I put values of expenses under profit and certain receivables under loss. Didn’t the line say, “take assumptions where ever necessary”?
Fortunately I was not the only one, and after the exam today, some people were desperate for a lot of liquidity, the one that drowns sorrows and is served in bars, and not the one that improves your cash and bank status. I had asked them to get me some liquidity too, though I would have been grateful for either of the two forms. Let me go out and see if there is a shop open at mid night anywhere close. Stay tuned to read more about how the Einstein of Finance proves himself in marketing. Trust me, that is another subject where customer understanding and selling of goods and services will take on a whole new different dimension.
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