Truck and Barter

Accounting Definitions

If you're reading this, you're probably looking for accounting definitions. I suggest this single-page, no-advertisement website for easy to understand explanations. Before you go there, I suggest you take a look around my weblog, Truck and Barter; you might find our economic analysis fun and addictive...

A lot of the economic literature I read has economists carping about how accounting definitions are not the same as economic definitions. Usually, economists want accounting definitions to shift towards their own usages, not realizing that many accounting definitions are hard enough as it is to keep straight.

At SynergyFest, Melissa Hershberger is doing a fine job in her new series on accounting definitions.

It all started after a productive lunch meeting:

some very bright colleagues and we were exchanging stories about businesses that thought all was well and then one day woke up and realized they couldn't pay the bills.... Hardworking individuals that had dreams and good ideas (and employed people) and managed their way straight into the ground because they didn't REALLY understand the difference between: Free Cash Flow, EBITDA, Depreciation, Profit and Net Profit.

I took accounting in college (from a Wall Street analyst who lectures on the side), and hated it. I even sold the textbooks after the class was over.

Lesson: Have accountants and business managers--not economists--teach you accounting.

Posted at May 13, 2004 11:55 AM

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