Showing posts with label accounting. Show all posts
Showing posts with label accounting. Show all posts

Monday, April 19, 2010

How I Invented the World's Fastest Method to Learn Debit and Credit

Note: The method was invented in 1990 and published in Manila newspaper BusinessWorld in 1999. The Street Strategist's Financial Literacy Program, an accounting and finance crash course for non-accountants,  is based on this method.

In which the Street Strategist offers the simplest formulation of the fundamental equation of accounting
How I Invented The World's Fastest Method to Learn Debit and Credit
t is probably ironic that one of the most popular articles I've written that unburdened the loads of many non-accountants was borne out of my incompetence that burdened me for years.
I'm the most unlikely person to challenge the accounting world but I rebelled: “I am not psychotic. It's the entire accounting world that's psychotic. I'm not dumb. It's the entire accounting world that doesn't know how to teach.”
Who in his right mind would challenge 500 years of accounting dogma, especially on the very basic concepts of debit and credit? I hate accounting. Why bother? If millions of accountants don't find anything wrong with it, what professional competence do I have to reinvent the wheel?
My classmates were drowning in case studies, while I browsed every book trying to deconstruct accounting. What was my sense of priority? I developed the Accounting Wizard at the expense of my other personal pursuits.
Deconstructing accounting
The Accounting Wizard was published in 1999 but I invented the accounting codes in 1990.
These were my objectives: First, to derive the accounting equation. Second, to understand the role of debits and credits. Third, to formulate the simplest and the most unambiguous method of using debits and credits that cannot be further simplified. Fourth, to deliver in a short article an overview of accounting in the most intuitive manner possible that would serve as the mental map for the student.
That was very ambitious. The Accounting Wizard may not have the same impact on you as it had on me because we solved different problems. You just wanted to learn accounting; I wanted to learn why I couldn't understand accounting.
But I had one thing going for me. I had a framework – the fundamental theorems of mathematics. Is it possible to reduce basic accounting into the simplest and most fundamental concepts or definitions similar to what's done in mathematics?
Sources of confusion
I evaluated what I could understand and what I could not. Note that I did not use the word “know” because it is possible that I don't know about a topic yet I could understand it, once I set my mind to it. The difference is huge.
I finally identified what I didn't understand. There were two: First, I couldn't understand how the accounting equation was derived, if ever there was a derivation in the first place.
Second, I didn't know how to perform debit and credit operations, I didn't understand the purpose of their queer relationships with the accounts and, finally, I didn't understand why Pacioli and friends invented these twin ideas in the first place.
Fundamental theorems
We all studied algebra, but can you state the fundamental theorem of algebra, that is, the theory upon which all of algebra is built? Too hard? Can you state the fundamental theorem of arithmetic? Don't tell me, you don't know that either.
The fundamental theorem of arithmetic states that every positive integer can be factored in one and only one way into a product of primes.
The fundamental theorem of algebra (FTA) states that every polynomial of degree “n” with complex coefficients has “n” roots in the complex numbers.
In mathematics, there's a common phrase: “necessary and sufficient condition.”
To the mathematician this is an extremely powerful statement. This is a ruthless mandate to eliminate any unnecessary condition, or any unnecessary step, coupled with an equally ruthless mandate that those conditions that remain must be sufficient to prove a theorem or to prove the existence of a fact.
One example of this “necessary and sufficient” mentality is Euclid's approach to geometry. Euclid developed geometry based on five postulates. He established that the fifth postulate is necessary. For 2,000 years, mathematicians tried to reduce the minimum postulates to four but they failed to eliminate the fifth postulate. In other words, nobody could further simplify Euclid.
The deeper the mathematicians analyzed Euclid, the more they appreciated his genius in formulating and choosing the five postulates that are necessary and sufficient to derive the entire branch of geometry.
War of reasons
My first problem was how to introduce the accounting equation. After so many courses and so many years, I still didn't understand how the equation was derived.
They couldn't understand why I cannot understand the accounting equation; on the other hand, I couldn't understand how they could possibly understand the accounting equation.
Reduced to simple terms, for them the equation was obvious; for me the equation was not obvious.
This was a fundamental philosophical conflict of religious proportions. And I was at the losing end of the unilaterally declared war of reason because my role was limited to pointing out the lack of rigor (or even the lack of derivation) of the equation but nobody seemed to realize the lack of rigor except myself.
Going back, my first accounting professor probably had 20 years of accounting experience. He was a good accountant but not a good teacher for new students. Forgetting what it was like to be a new student is the teacher's cardinal sin and the student's worst nightmare.
On the first day, he wrote the accounting equation: Assets = Liabilities + Capital.
Spinning my head instantly, it was.
Reason: For the life of me, I couldn't understand why liabilities and capital added up together must be equal to assets. The logic of the equation might be obvious to you but not to me.
I know that millions of accountants out there can justify that the logic of the equation is so obvious. But please allow me to explain why it is not obvious to me.
Whenever I see an equation, I always attempt to understand it. If it is a mathematical equation, I study its derivation. But A = L + C? I couldn't derive it. All those teachers did not attempt to derive it, neither did they find any need to. In whatever manner they explained it, it was not rigorous, and not intuitive enough for me.
But it seemed nobody in class was bothered by the lack of rigor of how the accounting equation was derived. So I figured I just wasn't perspicacious enough. It was another case of knowing without understanding.
As recently as a few days ago, I received this: “I don't recall any origin of the equation, but it must have been invented, to establish accountability and to safeguard its integrity.”
Correct, but not rigorous enough for me.
In fairness though, the teachers tried to rearrange the equation into A-L=C, which was understandable but still not intuitive enough for me, especially since the balance sheet was formatted in terms of A= L+C.
I thought there was something wrong in the way it was taught. But I was too embarrassed to admit I had absolutely no clue regarding the accounting equation. Probably, only a mathematician could empathize with me.
I envied those students who breezed through this simple equation. As for me, I regarded the equation as some magic rammed down my throat. It was my first taste of accounting magic.
Now, don't get me wrong. I don't know everything about accounting, yet I can accept that. It's called ignorance.
But if I cannot understand something that I know, that is called incompetence. And that is unacceptable.
However, the accounting world goes on, despite one confused individual. My only consolation is that it took hundreds of years to prove the fundamental theorems of arithmetic, algebra and calculus.
Mathematicians had been using, without understanding, these theorems. But they were not too proud to admit they didn't understand the theorems enough to prove them. The FTA proofs failed because they assumed – not questioned – the existence of the roots.
In the same manner, I assured myself that, perhaps, accountants made the same mistake, that is, they assumed the existence of the accounting equation even without a rigorous derivation or proof.
This was a more reassuring thought than admitting I was too incompetent to understand an equation that was obvious to everybody else.
Not having luck in finding a way to introduce the accounting equation in a rigorous or intuitive manner that satisfied me, I skipped the topic altogether and moved to the financial statements.
I decided to introduce the financial statements with the barest minimum definitions that would stick to a beginner's mind. But the definitions given in textbooks were too complicated for a 30-minute overview. Plus, they introduced concepts in the definitions that were unnecessary in violation of my guideline to use only “necessary and sufficient” concepts or conditions.
So then I started to define the balance sheet. After several months of figuring the simplest but most sufficient definition, I finally came out with one: It is simply a listing of all the company's assets. But I added this phrase that looked very intuitive to me: “showing the proportion of how they were acquired, either through borrowing or using its own capital.”
For you, that is nothing. For me, that was the most powerful accounting concept that knocked on my confused head. In providing some sort of a “geometric interpretation” of the balance sheet as a proportional combination of how the asset was acquired, I had in effect, “discovered,” the fundamental accounting equation assets=liabilities + capital.
When I use the term “discover,” I refer to my own personal revelations which, as I have pointed out earlier, were so obvious to you in the first place.
That's when the flash of understanding hit me. Given this definition of the balance sheet, the accounting equation comes out as a natural consequence of the definition. There was no longer any mystery or magic as to how A=L+C.
That, for me, was a bolt of lightning. I had finally found the most intuitive derivation of the accounting equation, not as a magical relationship rammed down my throat.
The traditional way is simply stating without deriving that the sum of liabilities and capital must be equal to assets. I proposed that the concept should be intuitively stated as “assets are always acquired by a combination of liability and capital, therefore automatically A=L+C.”
What was to me unnatural, illogical, and counter-intuitive many years ago, was now the most natural, logical, and intuitive equation of all.
And I discovered the accounting equation by accident – in attempting to formulate the simplest possible definition of a balance sheet using only the necessary and sufficient conditions.
Inventing the six codes
Then I decided to discuss the basic three financial statements first to give the beginner an idea of what to expect from accounting.
There were nothing conceptually great about the income statement and the statement of cash flows.
I decided to postpone any attempt at discussing debit and credit in order to show that understanding accounting is possible without the use of DR and CR.
The conceptual problems I faced with debit and credit were enormous. Were these two concepts necessary? Since I couldn't understand the debit/credit concepts, I skipped it temporarily and I tried to understand the rules first.
Most of the debit rules I came across were redundant. I couldn't believe the accountants were wallowing in all these redundancies. How could a normal mind absorb all these redundancies? I came to the conclusion that these accountants were brainwashed, not taught. They were fed with the rules, not taught to derive them.
In contrast, in math and physics, the students compete by providing different derivations of the same rules or equations. Plus the “necessary and sufficient” mentality, plus the “fundamental theorem,” mentality.
So I painstakingly studied all debit/credit rules. I grouped them into derived, and fundamental rules. Then I removed the rules that were not “necessary,” and maintained only the rules which were “sufficient.”
Voila, the entire bookkeeping imbroglio was down to only six rules which are necessary, sufficient and fundamental. All the other rules can be derived from the six rules.
Thus the Street Strategist's Accounting Codes were born.
The secret
After inventing the codes, I was now ready to attack the concept itself of debit and credit. It took me months to figure out that the intuitive way to learn debit and credit was to unlearn them.
Eventually, in my mind, the greatest mystery of accounting crumbled, and I came up with a snappy guideline: The secret to understanding debit and credit is not to understand them at all.
Even after reading the Accounting Wizard, many CPAs come back to me with their own shortcuts using tables or matrix. I must say I have been there, done that. Before Wizard was published I have had ten years of studying if there were any simpler, easier, faster way than the SS codes.
Charts and matrices are not that effective and the memory part is hard as you have to memorize them in your head. Also, how do you expect a computer programmer to encode a chart in his software?
To dramatize which method is better, think of a quiz game where 10-year-old kids answer either “debit,” or “credit.” The catch is that each kid will be coached by his parent who will have only 10 minutes to teach the child the rules of debit and credit.
An inventor who finished only first year high school reacts: “So that's why credit and debit never made sense! Nice to know I'm normal.”
From an investment house CEO with an MBA:
“Funny, I at first, had a hard time understanding it and I believe it is because we have been “brainwashed” in school about what debit and credit are. I now think my professor was just as confused!
However, after freeing myself from the concepts already ingrained in our brain, the light bulbs in my head started to light up. Hopefully, they don't blow up!
I'd like to present your concept to my 9-year-old. This way, he will understand the whole accounting concept before it is corrupted by the traditional way of teaching.”
Audit Executive
From the highest ranking auditing executive of one of the largest banks in the country: “Fantastic! Your six codes are concise and clear and your style is the simplest way of explaining debit and credit to non-accountants.
By the way, I was entertained by the manner by which you presented your thesis. Am sure there's a big market out there waiting and very much receptive to your expression style.”
Wharton MBA
From a Wharton MBA who's currently a consultant with the country's largest accounting firm: “A great article, indeed. Your reducing accounting to a few codes is good for us non-accountants. For me, the basic lesson in accounting is to determine from whose point of view are the terms being read; this is something that you clearly set up.”
From a college comptroller: “I find your example on how the bank statement terminologies can be confusing for non-accountants, very amusing.”
Intuitive focus
Here's another reaction from a banker: “Your theory that the left of T account is always DEBIT and the right of T is always CREDIT regardless of the nature of the accounts, is something that hit me, an accountant by education and a banker by profession. Probably because having been bombarded by debits and credits all the time I never realized or visualized what was happening every time entries in the book are being made.
“Your six codes which focus only on INCREASES of the Balance Sheet, Income Statement and Cashflow Statement accounts are, I believe, the best shortcuts for the debits/credits principle.”
Saudi Arabia
From a CPA in Saudi Arabia, in one of the largest oil companies in the world: “You said your paper was never intended to be useful, but indeed it is very useful to just about everyone who is concerned with finances. It is also useful to students of MBA but only at the time they would be reading and analyzing or interpreting financial statements.”
VP Human Resources
From a VP in Human Resources of an engineering firm: “I didn't realize it was that simple. You were right, I agonized trying to understand debit and credit in my MBA course to the delight of my professor. What you presented is a simple process any average man on the street could learn. Was that why you called yourself Street Strategist?”
US Asset manager
From a US asset manager: “I found it to be a wonderfully written piece, which is absolutely perfect for beginning non-accountants who wish to get to the root of financial accounting and sweep away the haze.  In my opinion, you have succeeded in providing the accounting-challenged, in an enlightening and comprehensive fashion, with the welcome relief they need from their financial ignorance in 30 minutes or less, indeed.”
From an engineering PhD: “I was wondering why debit and credit never showed up in the financial exams I took; and your Accounting Wizard reinforces my belief about their relative irrelevance despite their ubiquity. Your six codes will surely help me keep bookkeeping, debit and credit, at bay.”
The greatest irony
Now go to your resident mathematical genius and ask him to state the fundamental theorems of arithmetic, algebra, and calculus. He will not be able to state all three. Trust me, the most fundamental things are the easiest to know but the hardest to understand.
One last thing before I go. Just to give you an idea of how difficult it is to prove the fundamental ideas, the fundamental theorem of algebra was first proved with some gaps by Gauss, the prince of mathematics at age 21, a feat that eluded the greatest mathematical minds of all time including Euler and Leibniz.
Little is known, however, of a Swiss named Argand who beat Gauss by formulating the simplest of all proofs to the algebra theorem.
This was no ordinary feat, although his proof was not rigorous enough because it contained some gaps. The novelty of this proof was in presenting a geometric interpretation of imaginary numbers as 90-degree rotations.
Overall, it may sound ironic that it took a non-accountant like the Street Strategist to advocate the intuitive self-evident nature of the accounting equation, and to invent the six fundamental codes that facilitated the simplest approach the most fundamental operations of accounting.
However, this may be the most ironic twist of all: the genius who outsmarted Gauss who was considered the prince of mathematics at his own game, the algebraic genius who formulated the simplest proof to the single most difficult fundamental theorem of mathematics, the person who revolutionized algebra with his intuitive geometric interpretation of complex numbers, was Jean Robert Argand, who was widely known as –surprise, surprise – a professional bookkeeper and accountant. But of course!
Thus it came to pass that Jean Robert Argand, a professional accountant, crossed over to offer the simplest proof to the fundamental theorem of algebra.
On the other hand, the Street Strategist, a student of algebra, crossed over to offer the simplest formulation of the most fundamental equation  and operations  of accounting.
This is probably one of the greatest ironies of our history.
(Thads Bentulan, April 18, 2002)
* * * * * t * * * * *

Monday, September 21, 2009

The Accounting Wizard Revisited

This was originally published in 2002. The Accounting Wizard, itself, was published on Aug 18, 1999 (ten years ago!!)

In which the Street Strategist revisits his accounting invention

The Accounting Wizard Revisited


n 500 years, the teaching of accounting has not changed considerably but this paper seeks to revolutionize that, by attempting to explain accounting to non-accountants in 30 minutes. In this paper, the three basic financial statements namely, the balance sheet, the income statement and the statement of cash flows, are presented in a very simple and intuitive manner. The conceptual approach to understanding debits and credits used in this paper has been described by certified public accountants as very original and useful. Finally, the author invents six codes, not found in accounting books, showing what transactions are to be debited and credited. Written in a conversational style, by a non-accountant for non-accountants, this paper describes the personal travails of the author in learning accounting and how he invented the six codes.”

This was the abstract of the paper I presented at an international conference sometime ago.

I asked a friend to drive me over to the conference hall. Throughout the ride I repeatedly told him I was anxious how many delegates are going to attend my presentation given the simultaneous sessions. It would be embarrassing if there were less than ten. This conference was not about finance, accounting, or investment banking. It was the largest conference on the electricity industry in the Pacific Rim held every two years, attended by the major players from Europe and the USA peddling their latest technologies.

The vanishing award

Scheduled at the most unholy hour of 12:00 noon, my presentation suffered minor problems. As expected I only prepared the previous night and therefore unlike other presenters who used the multimedia room for practice, I didn’t even know the proper controls of the notebook computer I used.

Thus, the hungry attendees which included Europeans and Americans in addition to the Pacific Rim delegates failed to see my slides for about 10 minutes. I had to improvise my talk.

The panelist introduced me quickly as I only had about five sentences of biodata. While I was at the podium but before I could speak, the panelist made an unexpected comment – that my paper was very good and provided a new and easy way to learn accounting and that indeed you can learn accounting in 30 minutes.

I smiled. Many of the seated delegates smiled, too, at the amusing slogan of learning accounting in half an hour. That caught their attention.

Then the panelist said something that shocked me: “By the way, I tried to nominate the author of this paper for an accounting award for young professionals because of this paper, The Accounting Wizard, but I realized that the award was given only to CPAs.”

Great. That was no ordinary endorsement. Here was this panelist who is the CFO of the largest corporation by assets in the country, who thinks that my paper was worth an award. And I didn’t even realize the panelist recognized me at all.

Wait, if the paper contributes to the understanding of basic accounting, and deserves recognition, in the judgment of an expert in the field, why disqualify it because of the non-affiliation of the author? The situation was probably similar to John Nash writing a paper on economics (game theory) when he, in fact, was a mathematician; and that the Econometrics Society debated against electing him a fellow.

Indeed, come to think of it: If the author was in fact a CPA he could never have written that paper in the first place because CPAs follow the teaching style of the textbooks.

This paper turned the textbook around, squeezed out the six basic codes in the same manner as Euclid reduced geometry to only basic five postulates

In other words, the paper could only have been devised by a non-CPA and yet the paper itself is worthy of recognition by CPAs. Yet, it cannot be recognized because it was written by a non-CPA. There must be a catch somewhere.


Given the problems with the slides, I was not able to present smoothly, and under time pressure I was not able to finish the presentation. The audience laughed a few times during my impromptu comments such as “Look at this illustration here, look carefully because CPAs don’t understand this.”

As I finished my presentation, I beamed a big smile. I exceeded my targeted audience of ten. The room was SRO and I estimated about 120 delegates. Earlier sessions did not even fill up the seats.

Again, this proves something. If rules are bent to accommodate a new idea, it might pay off. Bear in mind, that this was a conference on power systems and the organizers accommodated a crazy idea.

Later that night, while I was in a corner waiting for actress-singer Pops Fernandez and singer Lani Misalucha to entertain the delegates, a man approached me. “Your presentation was very good. We enjoyed it.” It turned out he was one of the high ranking treasury officials of the largest private utility in the country, who sat throughout my presentation. I found out from other people that most of those who attended my presentation were actually CPAs and finance officers. They were probably curious about the nerve of a non-CPA attempting to revolutionize the intuitive approach to accounting.

Unexpected feedback

The Accounting Wizard first appeared on print on August 18, 1999. It was intended to be an exercise in introducing a fresh insight into accounting, an exercise in amusement. It was never intended to be useful.

Unlike Strategy Myopia, the feedback was unexpectedly astonishing. I mean, with Myopia, I expected some kind of positive feedback because of the novelty of the concept. But with Accounting Wizard, I did not even expect BusinessWorld to publish it, telling the broadsheet that I wrote this for the benefit of my friends who are going into MBA but since I had already written it, it’s up to the editors to accept or reject it.

And the most astonishing event of all: The CPAs who were at the top of their fields were the one who fully appreciated the utility of the invention of the Street Strategist’s Six Codes.

Here was the letter that probably represents the CPAs typical reaction:

“Dear Sir:

Your Strategy Myopia and Accounting Wizard articles are very good, concise, layman friendly and down-to-earth! I am a CPA (married to another, much smarter CPA) and working for an energy company. I confess that the brevity and wit displayed in Accounting Wizard was superior to the already brilliant teaching skills of my Auditing professor, Mr. Rustico Murillo of L.C. Diaz & Co.

I passed the Accounting Wizard piece to our Corplan staff (most of whom are industrial engineers yet are quite capable of generating long-term financial projections and interpreting the results for our management). I have to admit, you boiled the whole accounting essence (4 semesters worth) in your piece. (Should be required reading for students).

I just have a simple request. Why not do a sequel to Accounting Wizard, but this time focus on the common financial ratios that everybody encounters. You know, the Liquidity, Debt-Structure & P/E indices that the so-called finance literate mumble all day but which they could not simplify for the common folks.

Your piece would really clear all the clouds and mystique on finance, and make more people really comfortable with their gut instincts.

All the best for you! More power!

Robert Punsalan

CORPLAN Coordinator

PNOC Energy Development Corporation”

For accountants, too?

Even the CPA organization in Saudi Arabia joined the fray by serializing the article in its newsletter, which seems ironic because the target readers are all CPAs.

From their gazette: “Starting with this issue, we are reproducing (with permission) as attachment a number of articles written by the Street Strategist for the BusinessWorld. These articles are very relevant to our profession, and could be good subjects of our future CPE seminars. But what makes these articles quite different is the informal and very friendly style of the writer in presenting the subject – entertaining. We will give them all to you along with future issues of the Gazette. For the starter, we are attaching "The Accounting Wizard: How to become one in 30 minutes" where it's quoted "The secret to understanding debits and credits is not to understand them at all.”

Lawyers and all

Wait, even the lawyers jumped into the fire:

“I'm a lawyer, member of Syquia Law Offices, and I enjoyed reading your article. Translating your practical accounting techniques to real problem situations, I have a problem for you to solve…” and she went on to describe a property deal.

I replied that her situation was not an accounting one and I suggest using legal principles to apply to her case, although unfavorable to her case.

The lawyer replied: “Thank you for your advice/reply, I was just asking for an equitable formula applying sound accounting principles. By the way, you sound like a lawyer, too.”

Sound like a lawyer? There must be a punch line somewhere.

“Thanks very much for the wonderful article on being an accounting wizard. Helped me brush up on my Accounting 123,” wrote a lawyer –CPA.


On the other hand, the investment bankers were having a field day reading and distributing the Accounting Wizard worldwide.

“Brilliant: probably picked up more in ten minutes worth of reading than one year’s worth of studying from textbooks,” said James Tan of Pesaka Jardine Fleming.

“This is an excellent summary of general accounting principals. However, this seems to me how I learned accounting, 25+ years ago. Does this greatly differ from the early lessons in traditional accounting education? Also, for what purpose are you teaching accounting? That is, in what sense does one become an accounting wizard? To pass an introductory accounting course? To pass the CPA or CFA exam? Do bookkeeping? Analyze financial statements for credit or equity analysis? This looks like, to me, the key issue -- not discussed in your article. Accounting differs from art appreciation, in that I would not learn it for its own sake,” wrote Larry Kummer, CFA, Senior Portfolio Manager, Portfolio Management Program, PaineWebber, USA.

I think the reader missed the point of the intuitive approach of the article which addresses the different frame of mind of non-accountants facing accounting for the first time.


“I find the article very useful especially to share with my colleagues, highlighting the few areas of balance sheet, income statement and cashflow for a trip back to basic in an area made out to be complicated at times. Thanks and keep up the good work,” wrote Jerry Yeoh, Head of Debt Markets, HSBC, Malaysia


“This is most interesting. I graduated with an accounting major believing that accounting is just a bunch of nonsense (and still do). How do I explain accounting to non-accountants? That's a problem that I face constantly, for I cannot even explain it to myself. While still holding on to my belief that accounting is nonsense - supported by academics in accounting theory - and a waste of resources, the article has given me some interesting insights on how to explain accounting concepts to others who need to subject themselves to it. Thank you,” wrote Kai Weng Ho, Treasury Officer, Singapore Telecommunications.

“Hi, It’s straight after lunch and I thought I finally found something that can dramatically change my life and enhance my career prospects perhaps. I am very keen to get my hands on your 101 sure ways to be accounting savvy notes. Thank you very much,” Low Horng Han, Investment Analyst, Singapore.


“Hi, Accounting Wizard. I was interested in this article to see if it had a good explanation of debits and credits from the point of view of books of first entry, general ledger. I haven't finished reading it yet (busy times!) but it seems the article is intended to describe how financial statements work and it seems to do this pretty well” wrote Dermot Joyce, Fund Manager, ILEX high yield Fund London


“Could you please send me the Accounting Wizard article. I would like to pass it on to a few comrades?” wrote Brad Kowieski Business Development Associate, The Heck Group, Rhinelander, WI USA


“This could provide insights that would be useful for my next CFA exam. Thanks,” Michael Garcia, Senior Financial Analyst, General Motors European Regional Treasury Center, Brussels, Belgium.

Investment bankers

Overall, I guess more than 200 executives worldwide contacted me regarding this article. They represent the biggest banks and brokerages. While I cannot name them all, there were several director level executives who read and asked copies of the article including John Milton, CEO, ABN Amro Equities, Hungary; Terence Wright, President, Wright & Co. England; Michael Greenall, Chief Representative BNP Paribas Peregrine Malaysia; Robert Appleby, Managing Partner, Asia Debt Management Hong Kong. Kj Kim, Managing Director, Bbk Capital Partners, Seoul; Robert Mclaughlin, Director, Cantor Fitzgerald, Hong Kong; Anant Patel Managing Director, Bear Stearns London; George Johnston, Director, Barclays Capital, London; Mark Fuchs, Director, CSFB Securities Thailand; Antonio Klapkam, Director, ABN AMRO Brazil; and Spencer White, Director, Merrill Lynch, Taiwan.

Training and Seminars

Thank you for your article. Your article is good and simplify all the things; How about training? I thought that it is still useful beside the simple knowledge that you have offered. I'm come from Indonesia; I have experience in my job about 15 years doing various kind of analysis for the company from accounting and strategies. Thank you very much for your article. Regards,” wrote Heru Maliksyah, Taspen.

“Please let me know if there is a paper or presentation on this topic available. Thanks,” wrote Yangki Kim of Tellus Advisors.

I have been thinking of conducting the Accounting Wizard Seminar as I hinted in the original article but I’m waiting for a good company to use as guinea pig.

The accounting expert

Once in while some readers, most recently a banker, tell me that they have memorized my codes and it helped them understand accounting better. I guess to I have to agree with them because exactly it helped me. An MBA student in Kuala Lumpur passed it around the campus. A fund manager in California said it refreshed his rusty accounting done 20 years ago.

Then the accounting experts, like the CFO of the largest company who wanted to nominate the article for an award, found the Accounting Wizard very helpful.

And then there’s one more expert. He is the moderator of biz.comp.accounting internet newsgroup. He is a tax lawyer who has won oral arguments in the US Supreme Court. His accounting and tax consultancy is famous. And he contacted me asking permission to publish the Accounting Wizard on their website and to be given to his clients. This expert must have been convinced that paper was the easiest manner to introduce accounting to his clients.

I replied that he can use the article for non-commercial purposes only. I mentioned that if he gives the article as a handout in one of their seminars, or when he gives it to a client, that is already considered commercial use. He did not come back to me.

Anyway, I know it’s been another boring ride with me today. But for me the Accounting Wizard is one proof that you don’t have to trust the experts right away, that no matter how deeper a topic is studied, there may still be other ways to solve the problem.

In the case of the Accounting Wizard, it is a culmination of years of embarrassing incompetence and failure to understand accounting the way accountants teach them. The simplicity – not the complexity – of the article is deceiving. It looks very simple now that the complexity has been eliminated.

There must be a lesson here somewhere: Do not copy the way experts think, rather discover your own capacity to think. If you fail, you can always go back and follow the experts. The most important thing is to think.

(Thads Bentulan, April 4, 2002)

* * * * * t * * * * *