Categories
Accounting Medium- English Random Thoughts

The Things I Like Most About Accounting

1.   The Use of Mathematics

My predecessor would not know that it is possible to determine the exact amount of bonus of certain percentage based on net income after bonus is deducted from gross income along with other expenses-  until I used algebra.  She used to use the Gross Profit  figure as basis of bonus which I think is not appropriate. She argued, “How come you come up with bonus based on income you could not come up with without coming up with the bonus first?”

Obviously, she is neither an Accounting nor a Math major.

Nosebleed?

Brainfreeze?

To illustrate:  This my pro-forma for simplified Statement of Income

Sales                                                                   Php      xxx,xxx,xxx.xx

Less:  Cost of Sales                                                         xxx,xxx,xxx.xx

Gross Profit                                                                       xxx,xxx,xxx.xx

Less:  Administrative Expenses                                     xxx,xxx,xxx.xx

Gross Income before Bonus                                           xxx,xxx,xxx.xx

Less:  Bonus                                                                     xxx,xxx,xxx.xx

Net Income                                                                    xxx,xxx,xxx.xx

Lets substitute arbitrary values:

Sales                                                                 Php         100,000,000.00

Less:  Cost of Sales                                                            87,000,000.00

Gross Profit                                                                      13,000.000.00

Less:  Administrative Expenses                                        7,000,000.00

Gross Income before Bonus                                             6,000,000.00

Less:  Bonus                                                               5% of Net Income

Net Income                                                                     xxx,xxx,xxx.xx

Now, let’s solve for the value of Bonus:

Let

B = Bonus

GIB = Gross Income before Bonus

NI  = Net Income

It can be deduced that

NI = GIB – B

But

B = 5% or .05 of NI

Then,

NI = GIB – .05NI

Transpose, add similar terms

NI + .05NI = GIB

Or

NI (1 + .05) = GIB.

NI = GIB ÷ 1.05

Substitute:

NI = 6,000,000.00 ÷ 1.05

NI = 5,714,285.71

B = 5% of NI

B = 285,714.29

And your Statement of Income will look like this:

Sales                                                                   Php      100,000,000.00

Less:  Cost of Sales                                                          87,000,000.00

Gross Profit                                                                      13,000.000.00

Less:  Administrative Expenses                                        7,000,000.00

Gross Income before Bonus                                             6,000,000.00

Less:  Bonus                                                                        285,714.29

Net Income                                                                     5,714,285.71

 

Disclaimer

  1.  This approach is not the most efficient.  You can use any other formula, just be sure we’ll have the same answer.
  2. The problem may seem not to be a problem at all for someone,  but for the benefit of the doubt and the majority,  and for the sake of this post,  laissez-faire!
  3. This example is just one of numerous mathematical problems I encounter (she encounters) in the workplace.  Some others are far more challenging.

More things I love Most About Accounting.. soon

Categories
Accounting Medium- English Short Stories

The Plight of Mr. Z

The Plight of Mr. Z, the Accounting Manager (AM)

The General Manager (GM) writes an affidavit.

GM:  AFFIDAVIT OF LOST

AM:  Sir, Dapat po ay Affidavit of Loss.  (Sir, it should be Affidavit of Loss)

GM:  Bakit?  Nawala na.  Dapat past tense na. (Why? It was already lost. It must be in past tense.)

AM:  (Sighs)

GM hands the draft to the Accounting Staff (AS).

GM:  Paki-print nga nito. (Please print this.)

AS: Ok, Sir.

AS asks the AM for editing.

AS:  Sir, OK na po ba ito? I-print ko na? (Sir, is this OK?  I’ll have this printed)

AM:  Dapat ay Affidavit of Loss.  (It should be Affidavit of Loss)

AS:  Bakit po Sir?  Nawala na.  Dapat past tense na. (Why Sir? It was already lost. It must be in past tense.)

AM:  (Sighs)

 ***

The General Manager writes a Letter of Authority.

GM:  This is to authorized…

AM:  Sir, Dapat  po ay “This is to authorize…”  (Sir, it should be “This is to authorize…”)

GM:  Bakit?  Naibigay ko na yung authority.  Dapat past tense na. (Why? The authority was already given.   It must be in past tense.)

AM:  (Sighs)

GM hands the draft to the Accounting Staff (AS).

GM:  Paki-print nga nito. (Please print this.)

AS: Ok, Sir.

AS asks the AM for editing.

AS:  Sir, OK na p o ba ito? I-print ko na? (Sir, is this OK. I’ll have this printed)

AM:  Dapat ay “This is to authorize…”  (It should be “This is to authorize…”)

AS:  Bakit po Sir?  Naibigay na po yung authority.  Dapat past tense na. (Why Sir? The authority was already given.   It must be in past tense.)

AM:  (Sighs)

***

 

The General Manager writes the tagline for the company.

GM:  “Quality and Service shall not be Compromise.”

GM:  OK nab a ito? (Is this Okay?)

AM:  Sir, dapat po ay “Quality and Service Shall Not Be Compromised.”  (Sir, It should be “Quality and Service Shall Not Be Compromised.”)

GM:  Bakit? Di pa naman past tense to ah? (Why? It must not be in the past tense.)

AM:  (Sighs)

GM hands the draft to the Accounting Staff (AS).

GM:  Paki-print nga nito. (Please print this.)

AS: Ok, Sir.

AS asks the AM for editing.

AS:  Sir, OK na po ba ito? I-print ko na? (Sir, is this OK? I’ll have this printed.)

AM:  Dapat ay “Quality and Service Shall Not Be Compromised.”  (It should be “Quality and Service Shall Not Be Compromised.”)

AS:  Bakit po Sir? Di pa naman past tense to ah? (Why, Sir? It must not be in the past tense.)

AM:  (Sighs)

***

 

The GM makes an announcement for immediate hiring.

GM:  Urgently needed:  Two Accounting Staffs

GM:  OK nab a ito? (Is this Okay?)

AM:  Sir, dapat po ay “Urgently needed:  Two Accounting Staff.”  (Sir, It should be “Urgently needed: Two Accounting Staff”)

GM:  Bakit? Dalawa eh.  Dapat plural na. (Why? It must be in plural form.)

AM:  (Sighs)

GM hands the draft to the Accounting Staff (AS).

GM:  Paki-print nga nito. (Please print this.)

AS: Ok, Sir.

AS asks the AM for editing.

AS:  Sir, OK na po ba ito? I-print ko na? (Sir, is this OK. I’ll have this printed)

AM:  Dapat ay “Urgently needed:  Two Accounting Staff.”  (It should be “Urgently needed: Two Accounting Staff”)

AS:  Bakit po Sir? Dalawa eh.  Dapat plural na. (Why, Sir? It must be in plural form.)

AM: (Sighs)

***

 

Mr. Z, the AM resigns and eventually applies for a new job in a Company Y, a BPO as General Accounting Senior Assistant. The Human Resource (HR) Manager interviews him.

HR:  It is stated in your resume that you worked for Company X as Accounting Manager for five years.  What made you decide to resign and apply for Company Y?

AM:  I want to be ADEPT (the HR squints her eyes a little) with the high-end accounting software like ORACLE and SAP.

HR:  ADAPT.  So, you want to ADAPT  to ORACLE and SAP?!  You want to ADAPT to the ways by which those softwares work?!

HR:  In your previous job, how many Accounting Staffs do you have?

AM:  Six (6) Accounting Staff, Mam.

HR:  Six Accounting Staffs.  Did I hear it right?

AM:  No, Mam. Six Accounting Staff.

HR:  Only one Accounting Staff?!

AM:  No, Mam.  Six Accounting Staff.

HR:  Ah, Ok.  Six Accounting Staffs.  So, let’s call this a day.  Thank you for your time.  We will notify you for the results of your application via e-mail.

AM:  Thank you Mam.

The Day After.  

Mr.Z receives an e-mail.

 

Dear Mr Z,

We regret to inform you that your credentials did not qualify for the position you applied for.  We are looking for an applicant with good communication skills because… and we found out you have to improve yours…

About Company Y

Company Y is …

 

Sincerely yours,

 

____________

(Signed)

Ms. W.

HR Manager

Company Y