One of the great mysteries of financial statements specifically, and accounting in general is the Balance Sheet. To clear up some of the mysteries surrounding the Balance Sheet, I’m dedicating this edition to the operating statement. Enjoy!
I’m confused by this post; is it aboot the Balance Sheet or the Operating Statement?
Aboot? Are you Canadian?
That explains the confusion, a.
How does the Balance Sheet relate to the Operating Statement?
They are related in a very unnatural way. In fact, to my knowledge, they are related in a way that is illegal in most states above the “That-is-incredibly-disgusting-yet-it-explains-so-much-line” that delineates some places from the normal human population of the world.
Wait, what are we talking about?
Speaking of Nevermind, are you a fan of Nirvana?
Yes, except for the album Incesesticide, for a number of reasons including the odd relationship between the Balance Sheet and the Operating Statement.
Regarding the Balance Sheet, how does one know when to code one thing to said Balance Sheet, rather than one’s operating statement?
It is difficult for one to deterime where to code a transaction when one keeps referring to oneself as one. What I suggest is that one plus one equals two except in the case when you need to hide an expense, at which time one should hit the Balance Sheet and find a new job before one gets fired.
When amortizing an expense what method should I use?
There are a myriad of methods that can be used when amortizing an asset. It typically depends on the type of transaction but, when in doubt, I use the Meth vs Chef method. And if you don’t know now you now fool.
My boss has asked me to capitalize and depreciate various assets but I have no clue how to do that. What should I do?
Chances are your boss has no clue what he/she is talking about either so what I would suggest is that you go back to him/her and suggest that you use the LIFO method which would result in an anomaly on the bottom line which, in turn, will result in the deflation of the nations GDP and, ultimately, death. Then look for another job.
What, exactly, is the difference between the Balance Sheet and the Operating Statement?
That’s a complex question but, ultimately, the difference is that the two reports, typically, print out on different sheets of paper.
I’ve read every single edition of your Ask the Accountant series and feel like I’m a better accountant for it. What does that say about me?
I think Method Man said it best when he said:
You don’t know me and you don’t know my style
Who be gettin flam when they come to a jam?
Here I am here I am, the Method Man