Page 35 - Finance for Non-Financial Managers

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Finance for Non-Financial Managers
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achieves the highest degree of accuracy, relevance, and timeli-
ness by use of its repetitive processes, enabling accountants to
process the most data at the least cost. The most common
repetitive process in the world of accounting is the monthly
closing cycle. A company goes through the traditional monthly
process of “closing the books” in order to see how the company
is doing in terms of its objectives, including profitability.
Accounting Is Like a Football Game on Videotape
Imagine yourself at home on a Saturday evening in November.
You’re looking forward to watching the football game that was
played earlier in the day, while you were doing chores. You
recorded the entire game with your VCR and now you want to
watch it and really enjoy all the nuances of the action. In goes the
tape, you settle back into your easy chair, and you press Play.
In the very first big play of the game, the quarterback for
your team takes the snap, steps back, and deftly throws the ball
to a receiver 30 yards down the field. Just as the receiver reach-
es out to catch the ball, a defender’s hands block him and pre-
vent the catch. You’re out of your seat in an instant, calling for
the referee to call “Interference” and penalize the defender. Then
you realize you can replay the action and see if there was any
illegal pushing. You stop the tape, go back to the moment of the
play, and freeze the action so you can study it in detail. Even
though the action didn’t stop, your tape got every minute of it
and you can pick which segment of action to freeze for review.
Notice on the stopped tape that the ball is frozen in mid-air and
the players reaching for it are similarly frozen in time, feet high
off the ground. You can see exactly where everything was at that
moment—the players, the referee, and even the players in the
background who were part of the action elsewhere on the field.
In a real sense, it’s a snapshot of a game moment, a photo of a
single instant in the 60 minutes of playing time.
Grudgingly satisfied that there was no interference, you
restart the tape. Your team marches down the field, nicely mix-
ing running and passing, until it has a first down on the visitors’