Accounting Play Podcast: Learn Accounting

Liquidity Ratios Audio Liquidity Ratios   Topics Introduction Current Ratio Quick Ratio Cash Ratio Times Interest Earned Ratio   Introduction Liquidity ratios measure company’s ability to meet its short-term obligations (liquidity). Understanding liquidity is important because it shows the degree to which a company can be expected to pay creditors (or suppliers, via accounts payable), […]

Liquidity Ratios Audio Liquidity Ratios   Topics Introduction Current Ratio Quick Ratio Cash Ratio Times Interest Earned Ratio   Introduction Liquidity ratios measure company’s ability to meet its short-term obligations (liquidity). Understanding liquidity is important because it shows the degree to which a company can be expected to pay creditors (or suppliers, via accounts payable), and to do so per agreed terms. This can influence a company’s ability to maintain operations going forward. Liquidity directly impacts the ability to service debt payments. Problems with liquidity are a warning sign, often a first indication of significant operational problems. This is especially relevant to lenders and creditors who are concerned mostly with being paid back.   Current Ratio The current ratio (also known as the working capital ratio) is the broadest measure of short-term liquidity because it takes into consideration all available liquid assets, including inventory and accounts receivable. It is helpful in estimating liquidity over the production cycle or an annual period, but arguably less helpful in the more immediate short-term. Users such as lenders or creditors are less focused on this measure because of its broader scope. In healthy companies, this ratio result should be in excess of 1.5x; if not, then there is reason for concern and the analyst will investigate matters to determine the issues behind the low result. A ratio value of less than 1.0x is a warning sign that indicates the company could have difficulty meeting its short-term obligations. The user should make an effort to understand the composition of this ratio’s numerator. For example, it may be possible that receivables or inventory comprise too large of a portion of working capital. In other words, it is important to understand if less liquid components comprise the bulk of liquid assets, particularly when the ratio result is strong.   Quick Ratio The quick ratio is a more conservative liquidity indicator because it excludes inventory from the numerator. Inventory is generally less liquid than accounts receivable. A result of 1.0x would be considered breakeven but any concerned party will want to see results in excess of 1.2x at a minimum.   Cash Ratio The cash ratio measures cash and cash equivalent balances relative to current liabilities. It is an extreme liquidity ratio because other generally liquid assets like accounts receivable and inventory are excluded from the numerator. It measures the ability of a business to repay its current liabilities by only using its cash and cash equivalents. Cash equivalents are assets which can be converted into cash quickly, whereas current liabilities are liabilities which are to be settled within 12 months or the business cycle. A cash ratio of 1.0x is breakeven, meaning the company could satisfy its current liabilities in full using only cash and equivalents. The ratio is usually below 1.0x because cash is tied up in some degree in components that make up the process of production. A result close to 0.5x is considered normal.   Times Interest Earned Ratio The times interest earned ratio a basic measure of the ability to cover interest payments. The ratio is especially relevant for bankers and other lenders, all of whom will have minimum repayment standards. For such users, a minimum coverage ratio result might be 1.25x, and in general somewhere around 2.0x would be considered optimal. If the ratio is too high it might indicate that a company is not taking advantage of financing or leverage. Times interest earned does not include principal payments, so using this ratio only for situations where a company has contractual principal reduction payments would serve to overstate the “debt coverage.” Additionally,

Liquidity Ratios Audio Liquidity Ratios   Topics Introduction Current Ratio Quick Ratio Cash Ratio Times Interest Earned Ratio   Introduction Liquidity ratios measure company’s ability to meet its short-term obligations (liquidity). Understanding liquidity is important because it shows the degree to which a company can be expected to pay creditors (or suppliers, via accounts payable), and to do so per agreed terms. This can influence a company’s ability to maintain operations going forward. Liquidity directly impacts the ability to service debt payments. Problems with liquidity are a warning sign, often a first indication of significant operational problems. This is especially relevant to lenders and creditors who are concerned mostly with being paid back.   Current Ratio The current ratio (also known as the working capital ratio) is the broadest measure of short-term liquidity because it takes into consideration all available liquid assets, including inventory and accounts receivable. It is helpful in estimating liquidity over the production cycle or an annual period, but arguably less helpful in the more immediate short-term. Users such as lenders or creditors are less focused on this measure because of its broader scope. In healthy companies, this ratio result should be in excess of 1.5x; if not, then there is reason for concern and the analyst will investigate matters to determine the issues behind the low result. A ratio value of less than 1.0x is a warning sign that indicates the company could have difficulty meeting its short-term obligations. The user should make an effort to understand the composition of this ratio’s numerator. For example, it may be possible that receivables or inventory comprise too large of a portion of working capital. In other words, it is important to understand if less liquid components comprise the bulk of liquid assets, particularly when the ratio result is strong.   Quick Ratio The quick ratio is a more conservative liquidity indicator because it excludes inventory from the numerator. Inventory is generally less liquid than accounts receivable. A result of 1.0x would be considered breakeven but any concerned party will want to see results in excess of 1.2x at a minimum.   Cash Ratio The cash ratio measures cash and cash equivalent balances relative to current liabilities. It is an extreme liquidity ratio because other generally liquid assets like accounts receivable and inventory are excluded from the numerator. It measures the ability of a business to repay its current liabilities by only using its cash and cash equivalents. Cash equivalents are assets which can be converted into cash quickly, whereas current liabilities are liabilities which are to be settled within 12 months or the business cycle. A cash ratio of 1.0x is breakeven, meaning the company could satisfy its current liabilities in full using only cash and equivalents. The ratio is usually below 1.0x because cash is tied up in some degree in components that make up the process of production. A result close to 0.5x is considered normal.   Times Interest Earned Ratio The times interest earned ratio a basic measure of the ability to cover interest payments. The ratio is especially relevant for bankers and other lenders, all of whom will have minimum repayment standards. For such users, a minimum coverage ratio result might be 1.25x, and in general somewhere around 2.0x would be considered optimal. If the ratio is too high it might indicate that a company is not taking advantage of financing or leverage. Times interest earned does not include principal payments, so using this ratio only for situations where a company has contractual principal reduction payments would serve to overstate the “debt coverage.” Additionally,

Benefits and Limitations Audio Benefits and Limitations   Topics Benefits Limitations Balance Sheet Income Statement Industry Specific   Benefits Financial ratios are designed to provide users of information useful metrics to evaluate business activity and health. The results provide a quick and consistent methodology for digging into somewhat complex data and providing helpful insights to […]

Benefits and Limitations Audio Benefits and Limitations   Topics Benefits Limitations Balance Sheet Income Statement Industry Specific   Benefits Financial ratios are designed to provide users of information useful metrics to evaluate business activity and health. The results provide a quick and consistent methodology for digging into somewhat complex data and providing helpful insights to facilitate decisions. Projections (educated financial guesses about the future) may also be made based upon historical results and the corresponding ratio. For example, a stakeholder could use the current gross profit margin to project gross profit in the future based upon revenue estimates. Different stakeholders can benefit from different benefits of ratio analysis. The concepts apply to both internal or intra-company analysis as well as inter-company or peer analysis. Comparing a company’s financial ratios to a peer group is a standard analytical practice that helps give a basis for understanding company-specific ratios. By using a relative comparison to a group of companies operating in similar business lines, an analyst can form conclusions to help decision making. Comparisons are useful when in the same peer group in terms of the products or services offered, size, and structure. A big publically traded software company will be best compared against another big publically traded software company, and so on.   Limitations Ratios are based on historical information and history is never guaranteed to repeat itself. Historical data can sometimes also include unusual or nonrecurring activities that may not be present going forward. Ratios without context generally have limited value to stakeholders. A video cassette rental company, for example could have strong financial ratios, but be put out of business almost overnight with the release of DVDs and internet streaming. Financial ratios by themselves may not indicate such an abrupt change and therefore must be interpreted along with other circumstances. Ratios should be combined with other outside data points. Using gross profit margin to predict future cost of goods sold based on revenue, for example, is logical but dangerous if other circumstances are not considered. The ratio itself will not tell the analyst that current prices may have doubled due to supply chain issues or political problems, for example. There have been many companies with strong financial ratios that subsequently failed due to internal and external circumstances. Ratios provide insights into business metrics, but typically require further analysis to be valuable. A competent financial analyst understands that ratios often create more questions than answers and will increase the scope of research and analysis where appropriate. Financial analysis starts are the numbers, but takes into account other factors outside the balance sheet and income statement. The notes to the financial statements for example can be a very important area of analytical information that provide clues to the accounting methodology, lawsuits, plans, and other required disclosures. Micro and macro political and economic trends will also factor into analysis, such as new law or interest rate changes.   Balance Sheet Ratios provide information at a single point in time or time period. Ratios that use balance sheet accounts will be at a single point in time, because the balance sheet accumulates transactions up to a point in time. For example, cash is a balance sheet account that is specified at a given date. An analyst must pick a point in time that is relevant for the given analysis, such as December 31, a typical calendar year end. If only one point in time was analyzed the results might not be useful unless compared to several other time periods. Cash, for example,

Benefits and Limitations Audio Benefits and Limitations   Topics Benefits Limitations Balance Sheet Income Statement Industry Specific   Benefits Financial ratios are designed to provide users of information useful metrics to evaluate business activity and health. The results provide a quick and consistent methodology for digging into somewhat complex data and providing helpful insights to facilitate decisions. Projections (educated financial guesses about the future) may also be made based upon historical results and the corresponding ratio. For example, a stakeholder could use the current gross profit margin to project gross profit in the future based upon revenue estimates. Different stakeholders can benefit from different benefits of ratio analysis. The concepts apply to both internal or intra-company analysis as well as inter-company or peer analysis. Comparing a company’s financial ratios to a peer group is a standard analytical practice that helps give a basis for understanding company-specific ratios. By using a relative comparison to a group of companies operating in similar business lines, an analyst can form conclusions to help decision making. Comparisons are useful when in the same peer group in terms of the products or services offered, size, and structure. A big publically traded software company will be best compared against another big publically traded software company, and so on.   Limitations Ratios are based on historical information and history is never guaranteed to repeat itself. Historical data can sometimes also include unusual or nonrecurring activities that may not be present going forward. Ratios without context generally have limited value to stakeholders. A video cassette rental company, for example could have strong financial ratios, but be put out of business almost overnight with the release of DVDs and internet streaming. Financial ratios by themselves may not indicate such an abrupt change and therefore must be interpreted along with other circumstances. Ratios should be combined with other outside data points. Using gross profit margin to predict future cost of goods sold based on revenue, for example, is logical but dangerous if other circumstances are not considered. The ratio itself will not tell the analyst that current prices may have doubled due to supply chain issues or political problems, for example. There have been many companies with strong financial ratios that subsequently failed due to internal and external circumstances. Ratios provide insights into business metrics, but typically require further analysis to be valuable. A competent financial analyst understands that ratios often create more questions than answers and will increase the scope of research and analysis where appropriate. Financial analysis starts are the numbers, but takes into account other factors outside the balance sheet and income statement. The notes to the financial statements for example can be a very important area of analytical information that provide clues to the accounting methodology, lawsuits, plans, and other required disclosures. Micro and macro political and economic trends will also factor into analysis, such as new law or interest rate changes.   Balance Sheet Ratios provide information at a single point in time or time period. Ratios that use balance sheet accounts will be at a single point in time, because the balance sheet accumulates transactions up to a point in time. For example, cash is a balance sheet account that is specified at a given date. An analyst must pick a point in time that is relevant for the given analysis, such as December 31, a typical calendar year end. If only one point in time was analyzed the results might not be useful unless compared to several other time periods. Cash, for example,

Using Financial Ratio Flashcards Audio Using Financial Ratio Flashcards   Topics Using Financial Ratio Flashcards   Using Financial Ratio Flashcards Financial Ratio Flashcards is an iOS app that covers the most important financial ratios using both flashcards along with written and audio lessons that cover ratio analysis, calculation, and key points. Accounting, finance, general business, and MBA students can benefit from the illustrative formulas. Utilize the search feature and audio narration for learning on the go. Examples draw from financial statements featured in the Accounting Flashcards module included in the app. Other accounting materials can be found on Kindle and PDF at AccountingPlay.com/Product. Be sure to subscribe to gain access to free materials and stay posted on other resources such as the Accounting Play Podcast. Financial Ratio Flashcards may be used as a standalone resource or coordinate with business related curriculums. The financial analysis topics are also coordinated with illustrated accounting flashcards. Push on blue text within the lessons to go to relevant flashcards which may be in the ratios or accounting module. Some cards come free with the app, such as example financial statements. If a particular card or section is unlocked, you will receive a prompt to purchase the relevant content. Consider unlocking all the content at the same time for a substantial discount. See the Upgrade Section for more information. Checkout the accounting lessons if you need a review of financial statements, terminology, and preparation.  Utilize the bookmark feature to access the most relevant material when you need it. Ratios covered are often tested in standard exams such for becoming a CPA - Certified Public Accountant, CFA – Chartered Financial Analysis, and Chartered Certified Accountants. Please feel free to reach out personally to me at John@AccountingPlay.com and let us know how we are doing.   Financial Ratios in Concept Audio Financial Ratios in Concept   Topics Stakeholders Analysis Decision Making   Stakeholders Financial ratios are designed to be useful to any stakeholders of a business. Broadly defined, stakeholders may be anyone affected by the business: owners, employees, managers, creditors, customers, government, and well, pretty much anyone or any entity. For business owners, efficiency ratios may help analyze productivity by comparing important data such as the cost of goods sold and the revenue of the company. Investors and creditors will look closely at ratios which measure financial strength and profitability. Most ratios are created using financial statements prepared by accountants. Financial ratios are relatively simple calculations if you have some experience with algebra. If not, the formulas can be broken down step by step if the math appears intimidating. I may have taken the beginning accounting class three times, but this was not due to any mathematical limitations. The ratios covered use addition, subtraction, multiplication, and division.   Analysis Ratios are used in the process known as analysis. Analysis has different forms or purposes including financial, managerial, economic, market, and competitive. The most common ratios are covered, but there are many other industry and investment specific ratios that exist. Some investors and analysts (those that analyze financial data) may also create their own ratios not covered in standard textbooks. Ratios are tools utilized by analysts as part of the analytical process to understand different aspects of a business.

Using Financial Ratio Flashcards Audio Using Financial Ratio Flashcards   Topics Using Financial Ratio Flashcards   Using Financial Ratio Flashcards Financial Ratio Flashcards is an iOS app that covers the most important financial ratios using both flashcards along with written and audio lessons that cover ratio analysis, calculation, and key points. Accounting, finance, general business, […]

Using Financial Ratio Flashcards Audio Using Financial Ratio Flashcards   Topics Using Financial Ratio Flashcards   Using Financial Ratio Flashcards Financial Ratio Flashcards is an iOS app that covers the most important financial ratios using both flashcards along with written and audio lessons that cover ratio analysis, calculation, and key points. Accounting, finance, general business, and MBA students can benefit from the illustrative formulas. Utilize the search feature and audio narration for learning on the go. Examples draw from financial statements featured in the Accounting Flashcards module included in the app. Other accounting materials can be found on Kindle and PDF at AccountingPlay.com/Product. Be sure to subscribe to gain access to free materials and stay posted on other resources such as the Accounting Play Podcast. Financial Ratio Flashcards may be used as a standalone resource or coordinate with business related curriculums. The financial analysis topics are also coordinated with illustrated accounting flashcards. Push on blue text within the lessons to go to relevant flashcards which may be in the ratios or accounting module. Some cards come free with the app, such as example financial statements. If a particular card or section is unlocked, you will receive a prompt to purchase the relevant content. Consider unlocking all the content at the same time for a substantial discount. See the Upgrade Section for more information. Checkout the accounting lessons if you need a review of financial statements, terminology, and preparation.  Utilize the bookmark feature to access the most relevant material when you need it. Ratios covered are often tested in standard exams such for becoming a CPA - Certified Public Accountant, CFA – Chartered Financial Analysis, and Chartered Certified Accountants. Please feel free to reach out personally to me at John@AccountingPlay.com and let us know how we are doing.   Financial Ratios in Concept Audio Financial Ratios in Concept   Topics Stakeholders Analysis Decision Making   Stakeholders Financial ratios are designed to be useful to any stakeholders of a business. Broadly defined, stakeholders may be anyone affected by the business: owners, employees, managers, creditors, customers, government, and well, pretty much anyone or any entity. For business owners, efficiency ratios may help analyze productivity by comparing important data such as the cost of goods sold and the revenue of the company. Investors and creditors will look closely at ratios which measure financial strength and profitability. Most ratios are created using financial statements prepared by accountants. Financial ratios are relatively simple calculations if you have some experience with algebra. If not, the formulas can be broken down step by step if the math appears intimidating. I may have taken the beginning accounting class three times, but this was not due to any mathematical limitations. The ratios covered use addition, subtraction, multiplication, and division.   Analysis Ratios are used in the process known as analysis. Analysis has different forms or purposes including financial, managerial, economic, market, and competitive. The most common ratios are covered, but there are many other industry and investment specific ratios that exist. Some investors and analysts (those that analyze financial data) may also create their own ratios not covered in standard textbooks. Ratios are tools utilized by analysts as part of the analytical process to understand different aspects of a business.

“Please let me know if you ever have any suggestions as I begin studying for the CPA” -Big 4 CPA Candidate   CPA Exam Tips Intro The CPA exam is not extremely difficult by itself, but is very demanding in terms of time and planning. Would you fail a test if given all of the answers ahead of time? I hope the answer is no. If you have the proper review materials, you will have ample prior exams and instruction. Success on the exam is mostly based upon the level of personal commitment in terms of quality time spent studying and planning.   My Success I passed all of my exams on the first attempt. I saw coworkers far more advanced in their careers hung up on the exam, letting sections expire, and experiencing untold, horribly negative feelings. My solution was to dedicate everything to the exam for one full year, taking one section at a time, studying an average of two hours a day – every day. Hours were tracked daily. This study overkill approach practically guaranteed my success and long-term knowledge retention. I took the most difficult section of the exam first and coordinated the study period when work was the slowest. I used the best resource that worked for me, Roger CPA: Sale! $200 Off (By clicking the think above you can help support Accounting Play if you purchase the Roger course in the next 30 days)   My Dirty Secrets I had the time to over prepare for the exams and took unpaid days off to study, rest up, and travel to testing centers. Before bed, on the way to work, and on the treadmill - I would listen to audio lessons. I was also taking masters in accountancy courses and took my audit exam at the same time I had just finished the audit class. I completed every question in every book at least twice. I also worked in a small firm where I was exposed to both the audit and tax side so things were familiar. Money was no object: Hours at cafes, best review materials, and time off of work. Everyone will have their own opportunities and you must take advantage of what you have and be brutally realistic of what you don’t.   Planning One Year in Advance Simply qualifying to sit for the CPA exam is a daunting task. If you took days figuring out your major classes and talking to college counselors, this exam is even worse. You will be bombarded with so many deadlines and requirements that you will wonder if just taking the exam is part of the certification process. Plan the exact dates one year ahead and a contingency plan if you don’t pass the first time around. Whether it was the ethics exam or Board of Accountancy submission, I had every step of the way planned out and ready. Upon each score I would know the next step and promptly begin studying.   Save up and take the hardest section first Save up your money, time, and relationships for what will be a long year of studying. It is not the content that hurts the most – it is the sacrifice of giving up vacation time, family, and passions to study for a costly exam. But I would rather get it all done at once. I suggest saving up, planning it out, and making your commitment. Passing the easy test first and dipping your toes in the water is a dubious strategy as exam sections expire.   What about content? Oh yes and the CPA exam tests technical content. But you are more than smart enough for that. The review courses and books give you all the answers. It is a factor of time commitment, using quality study practices, and materials.   Vision Get clear on your vision as to why you are putting yourself through all of this to become a Certified Public Accountant. Draw on paper all of the benefits and revisit it often when you doubt yourself. This process can hurt a lot of things such as your: back, relationships, eyes, and head. Please explain to your loved ones what you are doing and ask for their support. When it is all over and your vision was pure,

Connect with your accounting peers and teachers Accounting is a profession of people, not living calculators. Connect with your serious classmates by working together and assisting each other at every opportunity. Successful career accountants are constantly connecting and giving their knowledge whenever possible. You should be on a first name basis with every instructor along the way. Make a memorable and long lasting impressions by demonstrating your interest and excellence at every opportunity. Formalize your general professional network Join an accounting business fraternity or online equivalent Be on a first name basis with every instructor along the way. Make memorable and lasting impressions by demonstrating your interest and excellence. Use online communities such as Linkedin and even Facebook Actively join and assist in local / national accounting activities Join Cal-CPA or equivalent organizations Attend events, get on a first name basis with people, and help at every opportunity Volunteer accounting services to an organization or prepare low income tax returns Check out VITA – Volunteer prep services and see how you can help See if your local community organization needs basic assistance – anything to get you involved with the books and records. Learn about and visit local tax and accounting firms Request an “informational” interview from local firms long before you ask for an internship or job Learn about what local firms and companies are looking for so you can steer your academic work in the proper direction. Stay current about accounting and business news Accounting at the top requires great knowledge of current regulations and updates. Signup for email updates from organizations such as the AICPA and private educational companies such as Spidell. Be familiar with front page business news and how to talk about it. Consider practical education along with your academic education Your accounting teacher may be impressed with your technical accounting skills, but you may find much of it irrelevant to your actual job. Consider taking courses at junior college or companies to learn tax and accounting skills. Checkout the QuickBooks pro-advisor certification and ways you can register to prepare taxes by learning about the requirements with the IRS. Bs = Accounting excellence – Internships are what matter Do well in school, but no need for perfect scores. It is far more important to have a passion for the subject and people. Firms want people that they are going to enjoy working for. Follow the above strategies to get yourself and internship, not a “5.0.” Sir / Ma’am may I have another!!! Accountants and CPAs are a glutton for punishment and work hours, especially early in their career. Take every opportunity to take on more projects and responsibilities. The CPA is a strategy, not a solution The CPA is a highly respected designation, but is not for everyone. 95% of successful accountants pass the CPA exam after they have been in the profession. Taking the test in itself is not a guarantee of employment. Think people first. When ready for the CPA exam process be sure you are in position to pass it and approach it strategically. Bonus tip – the shameless plug Get the Accounting Play – Debits & Credits game to drill your debits and credits

This Podcasts focuses on the Learn Debits & Credits eBook which includes printable worksheets.   Free for subscribers and blog readers HERE On Amazon for $2.99 HERE Free video course to coordinate with eBook HERE I was over debits & credits but realized you need to learn them if you have a test to pass or serious accounting to perform. If you want to chill on the couch and learn debits and credits without thinking too much – get my game: HERE – Read on if you want the free book and start practicing with pen and pencil. I made this book along with video instruction so you could learn debits and credits fundamentals, print worksheets, and have 1 – I said it, 1 practice problem to memorize, work, understand and OWN IT. If you can get this 1 comprehensive example, you will be far, far ahead in the accounting world.

After 10 revisions, Accounting Cheat Sheet and Kindle Version (paid) is out. Time for a release party! Well not quite yet. If I had a release party for every release, I think I would never get any work done. The Cheat Sheet is seven pages of accounting goodness that you can print and there is also another PDF version that is much larger with a table of contents. Free for blog readers and subscribers: Accounting Cheat Sheet 7 pgs Accounting Cheat Sheet on Kindle $.99 - Throw me a buck : D and please review   The purpose of this sheet is primarily for financial accounting students, but anyone who works in business can benefit. I created this resource to capture the most important accounting concepts in one attractive and consolidated place. The sheet is closely aligned with my accounting teaching philosophy which focusses on useful fundamentals, not abstractions. I will be introducing my teaching philosophy and how to utilize the key features of the Cheat Sheet. If you can learn and apply the concepts on the Cheat Sheet, you will have gained a level of financial understanding greater than most. Here I will outline some of the most important features of the sheet and how to make use out of them. I will cover my teaching philosophy as well as the main components of the sheet. I believe beginning students should learn accounting that focuses on practical knowledge of small business concepts and master financial statement basics. These concepts should be committed to memory and tested without the use of open notes and cheats (ironic I know). I would rather someone commit to long term memory and application of basic concepts, rather than spend time on the technical and forgettable. The Accounting Cheat Sheet contains a basic example of the four core financial statements: The balance sheet, income statement, statement of owners’ equity, and the statement of cash flows. The example statements are related and basic. This allows the students to memorize and apply one core example before going on to dauntingly complex public company statements. Generally I think the purpose of accounting classes should be first understanding basic statements and later preparing them. The presentation on the Sheet shows an excellent teaching example, as well as the purposes of the statements, alongside individual account explanations. The accounting equation and cost of goods sold is my next favorite part of the sheet. Since many successful business people never understand what Assets = Liabilities + Equity is or the cost of goods formula, I think this is an area best learned after the basic financial statement examples. The accounting equation is broken down along with debit and credit T-accounts. The income statement basis of revenue minus expenses is also detailed. Further academic breakdown of cost of goods and – gulp – inventory costing methodologies are covered later, but not something I put on my priority list. Next I would take a look at terminology and business types. Professionals should understand terms such as net, gross, cost basis,

In this particular episode, you will learn About operating a small CPA firm Getting hired at your local firm John Gillingham: Hi, welcome to the Accounting Play Podcast number 22. Today I have Travis Long, CPA -- owner of a small CPA firm. How's it going Travis?   Travis Long: Great, John, thanks very much for having me. John Gillingham: Yeah, and -- so today we just wanted to have you come on and kind of let us know what it's like operating an independent, successful, small CPA firm. Maybe some advice for people who are looking to do that themselves, or maybe that's a longer-term goal, or maybe they want to work for a small local firm. Again, this is John Gillingham and you can always find me, John@AccountingPlay.com and check out the apps to learn financial accounting all in the app store.   So, Travis, how did you get into this whole CPA business anyway?   Travis Long: That's a great question, John. It was king of a zig-zag course, I think, for me getting here that maybe it is for some others. And then you've got the people who are accounting majors and know from birth that's what they want to do. But that wasn't my situation. I actually -- I was undergraduate -- I went to Principia College, which is a small, private liberal arts college in the Midwest. And I learned a little bit about everything there. Had no idea what I wanted to do. I did have an interest in accounting and there were a couple of students and we wanted to put together a couple extra accounting classes which one of the professors did for us.   But then, you know, that was about it. There wasn't really a full accounting program there, and so when I graduated I still wasn't exactly sure what I was going to do. But I had a job offer with a small telecommunications company back in Atlanta where I grew up. And so -- anyway, we -- I ended up working there for a little bit and then kind of went around. Had a couple other things I ended up doing. My wife at the time then was in grad school and --   John Gillingham: Sounds like a type of situation that a lot of people who jump back into their career are kind of facing. And it's always a surprise to me, too, how so many people restart. And so do you think that's part of how you ended up at a smaller CPA firm rather than, like, a big four once you started out?   Travis Long: Well, yes. So after my wife graduate from school we moved out here to Monterrey and then I decided to start looking for work with a public accounting firm to get some experience, just because of my interest in accounting. And ended up with a small firm in the area.   John Gillingham: Really? See -- and I'm going to tell the audience a little secret. Travis and I actually work together at the same small firm. And it was strange, too, because I -- honestly, I had no experience except maybe one junior college class. And after I did that junior college class, I was able to get in with the local firm because I knew how to do tax prep. And so that's one angle, if you're really looking to get into a CPA firm for whatever reason. If it's the allure of the license or the steady hours. One way in is the tax route and that's kind of how I got in that exact same firm. Also in Monterrey, which incidentally, Travis, is a pretty beautiful place isn't it?   Travis Long: Sure is, yeah. Put it at the top of the list [laughs]   John Gillingham: I always -- we probably shouldn't tell people how nice it is, but I was just thinking of all the luxury of living in a nice area, being close to home, and kind of being able to set your own hours. And those are all sorts of things in my CPA dream that I could do. And so I really think that, outside of just going straight to a big four,

In this particular episode, you will learn Accounting study tips not only to help you learn more, but understand why you are learning it John, CPA, from Accounting Play here to share some tips on how to win at your accounting class. Here is my top 10 List: Listen to this on the Accounting Play Podcast Remember and write down why you are learning Accounting Without a reason as to WHY you are doing this, you are missing the primary motivation. Study according to your goals. “I need to pass” versus “I want to be a CPA” requires completely different strategies! Care about your learning and write down what you are going to take away from the class forever   Take it back to the basics Lots of homework can be practically impossible and time consuming. Focus are mastering a few basic problem sets to get the foundation.   It takes time Dedicate a significant amount of time and track it. Your classmate who says they barely studied and got an A is probably exaggerating.   Study according to your learning needs. Most people retain in the following order: Doing, watching, hearing and in last place – reading! Get right into problems Don’t waste too much time glazing over the text   Get an accountability partner, aka, a study budy Great excuse to make new friends and stay motivated Accountants work close with each other, so you better start now Teaching your partner is a double benefit   Drill and memorize the basics Some things require memorization, like, “debit cash up” Get a little note in your pocket so when you are out and about you can review it and just commit a few things to memory   Apply your learning to relevant interests it Kinda an offshoot of remember the “why” you are studying this If you like big business, for example read about it in the news and try and apply your concepts When studying for the CPA exam I used the free annual reports from Berkshire Hathaway, read it “100” times (probably 15 times, in the snow) until I understood it and applied advanced concepts to   Repeat problem sets, questions, practice exams Taking accounting tests and tests in general requires repeat practice… really that simple Don’t memorize answers, cover things up, and drill, drill, drill Getting good scores on tests can be achieved through this drill, drill, drill, process   Treat yourself Study where you enjoy it the most. For me, studying at my favorite café hyped up on cappuccinos and pressed paninis every day… for almost a year… was what it took for me to stay consistent, enjoy the process, and study for long-term knowledge   Consistency Study consistently, giving your mind time to absorb material and make the new connections Know your own retention and motivation – do what you know has worked in the past   Bonus tip – the shameless plug Get the Accounting Play – Debits & Credits game to drill your debits and credits Free cheat sheet for studying on the go and open book exams Free Learn Debits & Credits eBook with printable worksheets and an epic problem to memorize Free Podcast with accounting lessons on the go