Costing versus Financial Accounting

Once, I was asked in one of the interview, which is more important between costing and financial accounting. This is a quite difficult question, but considering that the post is for property investment, my answer should be it is costing that is more important than financial accounting, with the reason that costing is the essence of financial accounting and it provides the starting point for financial accounting. Yes, costing is the starting point which gives the first step and figures for the next financial accounting move.

But, it real life, they are equally important. They are dependent to each other. Costing serve as the starting point for financial accounting, but without financial accounting, it is meaningless. Financial accounting serve as the recording for costing and thus provide a medium of next valuation for decision making of both transaction of “underspend” or “overspend”.  A wrong recording would give a false alarm and wrong decision making. This ultimately will give a false valuation for the organization particularly in managing profitability and next resulted a wrong decision making in other area such as investment, strategy formulation and not to forgotten, statutory reporting and taxation.

So, which one is more important? It would depends to the situation, but for me personally, they are equally important and play a different roles in complement each other.

Phobia on figures and Accounting/Finance

Do you know one of my phobia is towards the figures? Honestly, I hate and afraid of figures particularly towards Mathematics. Ever since primary school, I was never been good with Mathematics. It was just a subject that I normally pass it satisfactory. I would feel amaze if I could score high marks. To show how bad I am with Mathematics, I could not do prompt arithmetic calculations in my head, I always need calculator, and this has never been changed even until now. You may do want to trust my prompt calculation.

Surprisingly, I took accounting during my degree and now I earned my living from it. How is it so? This is unexplainable. For me, accounting is different from Mathematics, although they are originated from the same source, which is the figures. They are related to each other but have a different set of rules. Each will have different set of formulas and treated differently.

So how do I adopt to accounting? I started my first lesson in matriculation. I have no foundation of accounting and that was the first time I saw it. It seems a very hard subject, because of that I have to make daily revision so that I could catch up in class. Despite of daily revision, the subject still remain alien to me. I survived such subject with memorizing the formula and team work. Most of the time during the quizzes, I memorize the formula, applying to the question and write the working, and my friends would do the end calculation. As a result, we would have a same answer for all the quizzes. I passed the exam multiple exercises, applying the same formulas and workings over and over to the past questions until I get familiar to it. This has been on going until my degree stage.

It was even worse when it comes to taxation and management accounting. I must admit that I do not understand what they are all about but passed the exam through formula memorization. Not to mention when it comes to public sector accounting or the theoretical part, which most cases they would be word by word memorization. I never thought I could passed and obtained my degree in accountancy.

I began my career with financial accounting as the core. This is where I started to polish back my foundation and learned back everything that I needed, this time with full understanding on what and how importance the steps of accounting entries. I had a great teacher (thanks to Puan Tamsiah), which then I found that financial accounting is not that hard anymore, not as bad as I was experiencing during my degree. It was not only steps and entries, I was teach to emphasis on the important of valuation and verification, and not only relying on the system input only. I then realize that this is the foundation of everything that you needed in finance and accounting. By mastering this part, it helps me mastering other parts of finance and accounting such as reporting, auditing, budgeting, monitoring, analyzing, taxation and others. Of all sudden, I realize that I do not afraid of figures anymore, well of course not the prompt calculation, which I still until now.

Things has become simpler for me day after day. What makes it simpler, was not the formula memorization, but the memorization by heart. I find it easy because I applied those formula into real life through rationalization. I find it more meaningful compared to formula memorization. I guess it would be a better method for anyone who wanted to learn accounting and I have been sharing this with the staffs all these while. After all, this would help to get rid the phobia for those who have allergic to figures just like me. I make my day to help everyone who have the same problem just like me.