Читать книгу Accounting For Dummies - John A. Tracy - Страница 18

We’re sure you know the value of learning personal finance and investing fundamentals. (Given the big push these days on improving financial literacy, we recommend Personal Finance For Dummies and Investing For Dummies by Eric Tyson, MBA, both published by Wiley.) A great deal of the information you use in making personal finance and investment decisions is accounting information. However, we do have one knock on books in these areas: They don’t make clear that you need a solid understanding of financial statements to make good use of the financial information.

We’ve noticed that a sizable percent of the populace bash the profit motive and seem to think businesses should not make a profit. We would remind you, however, that you have a stake in the financial performance of the business you work for, the government entities you pay taxes to, the churches and charitable organizations you donate money to, the retirement plan you participate in, the businesses you buy from, and the healthcare providers you depend on. The financial performance and viability of these entities has a direct bearing on your personal financial life and well-being.

We’re all affected by the profit performance of businesses, even though we may not be fully aware of just how their profit performance affects our jobs, investments, and taxes. For example, as an employee, your job security and your next raise depend on the business’s making a profit. If the business suffers a loss, you may be laid off or asked to take a reduction in pay or benefits. Business managers get paid to make profit happen. If the business fails to meet its profit objectives or suffers a loss, its managers may be replaced (or at least not get their bonuses). As authors, we hope our publisher continues to make a profit so we can keep receiving our royalty checks.

Your investments in businesses, whether direct or through retirement accounts and mutual funds, suffer if the businesses don’t turn a profit. We hope the stores we trade with make profit and continue in business. The federal government and most states depend on businesses making profit so they can collect income taxes from them.

Accounting extends into many nooks and crannies of your life. You’re doing accounting when you make entries in your checkbook and when you fill out your federal income tax return. When you sign a mortgage on your home, you should understand the accounting method the lender uses to calculate the interest amount charged on your loan each period. Individual investors need to understand accounting basics in order to figure their return on invested capital. And it goes without saying that every organization, profit-motivated or not, needs to know how it stands financially.