Ask the Accountant: Time Value of Money

This month’s topic for Ask the Accountant is going to be intense. The concept of time value of money is full of intricacies, formulas and a bunch of other stuff. It’s complicated, but then so is money. Without further ado then, let me clear up this weighty topic once and for all.   What is the time value of money? Simply put, the time value of money is a bunch of formulas that explain how most of us are going to still be broke in the future while the rich continue to be jerks.   That’s a little harsh don’t you think? I mean not all rich people are jerks are they? Yes but, like Will Hunting, it’s not their fault. Except when it is.   Can you elaborate how the concept of the time value of money leads to your conclusion? I would love to. The time value of money is a concept that explains what a dollar today will be worth at a point in time in the future given a set of variables. What these variables are and what a dollar would be worth given these variables are irrelevant due to the fact that my dollars have all been spent on various necessities, such as, the NFL Sunday Ticket, while the rich folks actually have to worry about their dollar decreasing in value over time. This, in conclusion, is what makes them jerks.   I’m new to accounting and haven’t had to deal with this concept yet. What, in your opinion, is the most important aspect of the time value of money concept? The most important aspect of the time-value of money concept is that in order to calculate what a dollar will be worth at some future time is to get somebody who does understand it to figure it out for you.   You mentioned before that if you don’t have any money you don’t really have to worry about what your dollar is worth in the future, with that in mind do you think I’ll have to worry about it someday? He is I, and I am him; slim with a tilted brim.   That doesn’t make any sense?! What kind of accounting column is this? What’s your name? Snoop Doggy Daaa-aaawg. Bow-wow-wow-yippee-o-yippe-yay.   I don’t know what to say. Is there anything to say after that?   It would be nice if you answered my question. Did it ever occur to you that maybe I don’t have the answer?   It has now. Well, maybe you should have thought of that before huh?   Maybe, but I guess I assumed that since this was an “advice” column of sorts that you would actually answer questions that we asked. Who’s we?   Me. And all the rest of the people who have wasted their time asking for answers from you. I see. You know what’s interesting about time?   What? A dollar’s future value can be determined by using the time-value of money calculations. The only caveat is that you actually have to have a dollar which you, to answer your question, probably won’t have. Will you?   No. Feel better now?   No. But I do have another question for you. What is it?   How is that you’ve been asking the questions and I’ve been answering them? I believe it has something to do with the Gin & Juice.   Does anyone, including yourself, take anything you write about seriously? Besides Snoop Doggy Dogg (a.k.a. Snoop Lion, Snoop Dogg, Snooper, Snooping on my Neighbor)? I don’t think so.   What was the topic of this column again? Your guess is as good as mine

Categories: Accounting, Humor

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