Pros: Understandable, good examples, covers a lot of ground
Cons: Addresses so many topics, there isn’t always much depth
Rating: 3 out of 5
I picked up Accounting Demystified after volunteering myself to keep the books for ErrantDreams. This isn’t my first run-in with bookkeeping and accounting. However, it is the first time it’s been my responsibility. I found Accounting Demystified helpful in coming up to speed to do that job, but several sections were too high level an overview to answer my questions. I did find I needed other books with more depth and detail.
Accounting Demystified is definitely approachable and easy to read, which is probably the most important thing in a self-study guide. The text is clear, and there were plenty of relevant examples. The chapters on conducting a financial analysis by calculating and interpreting financial metrics and ratios were particularly good in this respect. Ms. Hart uses Dell and Gateway as examples, walking through all the calculations and reasoning about what the results really do (and in many cases, don’t) mean. I didn’t find the self-test questions at the end of the chapters to be particularly useful, but I usually don’t in other books that have them, so that probably reflects more on me than the book.
The chapters explaining the basics of accounting are a good introduction, as well. If you are struggling to understand a balance sheet or income statement, you’ll find a lot of help here. Upon completing the book, even the thorniest journal entry will lay bare its secrets at your whim. When you see the written records of financial transactions on the page, they will speak to you, and they will use honorifics.
However, I ran into trouble when I tried to apply it in keeping our own books. I understood the basics, but I kept running into questions I couldn’t answer. Do I have to enter every sales transaction individually, or can I put in summary totals, such as end of day, end of week, or end of month? If I can summarize over a period, how often do I need to do so, or what factors should weigh in on the decision? I see how to account for a sale, but what if someone returns an item? For that matter, the sales examples don’t account for sales tax; how do I handle that? If I purchase several raw material inventory items, and they’re shipped to me, does the shipping cost figure into the inventory value of the items and if so how? What if I buy a package of bolts that has anywhere from 1000-1200 bolts in it, but I use them 5 at a time to assemble a product — how much are they worth each when I don’t know how many I have, exactly?
I learned enough from Accounting Demystified to read and understand someone else’s accounting records. In fact, I even learned enough analytical techniques to know whether what I was reading was good or bad, or at least raise the right questions. But I needed to do more than just understand someone else’s accounting system. I needed to set up my own. Too much detail was missing for me to do that.
In some ways, I feel a little badly about rating the book only 3 out of 5. I only have my own perspective to work from, so it is what it is, but it’s quite possible someone with different needs might find this book to be exactly what they’re looking for. I would definitely recommend it to anyone who doesn’t have to set up and maintain their organization’s accounting system but wants to have a solid understanding of what the data means.