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  • David R. Edwards

Accounting & Life - A Metaphor



In a hole in the ground their lived a hobbit, or I mean an accountant. In large hospitals the lab is almost always in the basement, and in most businesses that is where accounting resides as well. The bean counters can work anywhere, right?


For over 20 years I worked as a clerk, bookkeeper, business manager, and chief financial officer. I got a lot of satisfaction when at the end of the month my ledgers were balanced, my sub footings tied out, and all my transactions were adequately justified.


For non-accountants there are several sub-ledgers for things like accounts payable (what we owe), accounts receivable (what is owed us), income (money earned), and expenses (what we spent). Each of the ledgers is totaled up and the total entered into one of the two primary financial statements, the income statement (profit/loss) and balance sheet (statement of financial condition). As invented in the 1600’s every transaction is recorded by two entries, typically one that affects the balance sheet and another that affects the income statement. At the end of a period, say a month, all the entries in sub-ledgers are combined into the two statements and everything must be in balance. If they are not in balance, you must figure out where the error was made and fix it. Statements out of balance are useless, statements in balance provide vital information regarding the financial health of the organization.


At the end of a year you close out your books and get them audited. As noted, most transactions impact both the income statement and the balance sheet. The income statement, however, is fundamentally different in that the totals in the income statement are zeroed out and transferred to the balance sheet. In other words, every new year your income statement starts out at 0. The balance sheet on the other hand reflects the cumulative balance of every prior year's income/expense activity. It never zeroes out, it accumulates. Both statements are important, and both tell you critical information about the business. The one without the other is incomplete.


The Metaphor

OK, enough accounting, here is the metaphor. Some of us live our lives like an income statement, and others like a balance sheet, few include critical elements from both.

  • Income Statement people tend to zero out their life at the end of a period. They tend to be productive but don’t pay as much attention to relationships, or personal growth, or purpose. They are focused on results, now, not the long term. So, make a mistake now – pay the price and move on. We had a good time, yeah, celebrate, but tomorrow is a new day.

  • Balance sheet people tend to accumulate and never forget. You said “that thing” to me and I will never forget. That is the 7th time this year you have made that mistake. They have a memory like an elephant and can hold a grudge seemingly forever. These folks seem to love ruminating on the past, not to learn from it but to rub it in.


I suggest that a successful life is not the accumulation of good and bad experiences with some balance at the end of life to represent success. Nor is it a blazing trail of rabid activity focused on the moment without accountability or purpose. There is value in recognizing the good and bad, the wise choices and the foolish ones. The key is what we can learn from them on our journey of becoming our best person. Especially with your mistakes there is value in learning and then zeroing out the balance. If you beat yourself up forever for each mistake you deny yourself the learning and growth possible through the learning – doing - becoming process. You accumulate the learning, not ruminating on past mistakes.

I work hard today because I am pursuing my vision aligned with my values and the process brings me joy and happiness. I have good and bad experiences as they are both part of a normal life, but unlike many people I learn from them and become a better person. My focus is on the now, with learning from the past, and guided by my vision or intent for the future. All parts of life are in harmony.


People who value both forgetting (income statement people) and learning (balance sheet people) will over time be more accomplished, connected, and balanced. This is a life of confidence, resilience, and purpose.

 

David R. Edwards is the author of, “New You! Who Knew? The book guides you on a journey through 10 enduring principles which combined lead to becoming a whole person, accomplished, connected, and balanced.

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