Understanding the Basic Accounting Equation, Part I By Carolyn Previti Simply say the word “accounting” and watch the collective shudder of TCNJ business students. The term alone causes flashbacks to two arduous semesters of required coursework for any business major. A topic deemed to be worthy of a full year of study, however, is worth a few minute’s read. I promise, no journal entries required.
Accounting is said to be the language of business. In particular, financial accounting is the system that records and analyzes economic transactions to provide information for decision-making. It is the system upon which all other business disciplines rely for accurate financial data. Any introductory accounting course introduces the basic accounting equation: Assets = Liabilities + Stockholders’ Equity. As a student of business, you have most likely memorized this fact of accounting, perhaps without truly understanding its implications. In a three-part series, I will address each component of this mathematical expression to provide clarity of this tenant of not only accounting, but of business as a whole. Assets are, quite simply, items of value that are used in a trade or business. In a lemonade stand, the assets of the business are the stand, the lemons, sugar, and ice, as well as the refrigeration system. We can further break this term “asset” and the preceding examples into two categories: “property, plant, and equipment” (PP&E) and “inventory.” While in practice there are many more types of assets, we will focus on the listed two for simplicity. Inventory refers to the finished product(s) your lemonade stand sells, the lemonade, as well as any ingredients or components of the lemonade. The ingredients are your ice, sugar, and lemons. The property, plant, and equipment of the business would be the stand itself and the fridge. By the definition of PP&E, the stand and fridge both have longer useful lives than the business’s inventory. This makes sense; fresh lemonade lasts a few days, whereas a refrigerator can be used for quite a few years. Another important distinction between inventory and property, plant, and equipment is that PP&E is less easily converted to cash. In essence, this means it is easier to sell your lemonade, lemons, ice, and sugar to generate revenue than to find another lemonade stand entrepreneur to buy your stand and minifridge from you. Despite these differences, all the above-listed items are assets because they carry value for the business. They represent future benefits, aka lemonade sales, to your small startup. Whether they do so by facilitating the production process or by being a component of the finished good helps us distinguish them as inventory or as PP&E. So whether you are operating a lemonade stand or perhaps manufacturing pixels for TCNJ’s campus, assets are those tools used in the business to create future value and that represent future benefits.
2 Comments
By Kaelyn DiGiamarino A book review of Sheryl Sandberg's book. Two years ago, two words shook the way I perceive myself and my place in business: “Too nice.”
I walked out of my first professional interview expecting not to receive an internship offer, and I was correct in that expectation. What I did not expect was the feedback I received from the interviewer a few weeks later. I was not told I was under-qualified. I was not told I did not speak well, or that I was not presentable. I was not told that I was too young, or that I lacked the proper credentials. I was told that I was “Too nice.” Too nice—it is a phrase that turns a complimentary adjective into a derogatory one. In high school, my senior superlative in the yearbook was “Nicest girl” in my graduating class. The superlative I once took so much pride in now seemed to have been turned into one that indicated I was somehow unfit for the world of work. Two words turned a characteristic I once used to define myself into venomous self-doubt. In Lean In, Sheryl Sandberg points out that if a woman is seen as “nice,” she is often considered more nice than competent. Conversely, if a woman is viewed as competent she is unlikely to be seen as nice regardless of how nice she may, in fact, be. This juxtaposition of niceness with competence is just one of many perceptual imbalances that Sandberg discusses in her book. She describes both the major reasons as well as the lesser ones whereby women hold themselves back, “by lacking self-confidence, by not raising our hands, and by pulling back when we should be leaning in.” Whatever a woman’s hesitation to raise her hand is—perhaps a fear of not sounding intelligent enough, or a fear that the words she speaks may come out imperfectly—that hesitation is rooted in mental barriers women put up themselves. How easy it is for a woman to sit in a room thinking she is out of place, when in fact she may be one of the most valuable contributors in the room. Sandberg confronts the way women internalize the negative messages we get throughout our lives, whether it is being told we are too bossy or too nice. The internalization of these messages builds mental barriers that cause such hindering hesitation. As the Chief Operating Officer of Facebook and a former Google employee, Sandberg has spent a significant amount of time in the male-dominated world of Silicon Valley—the Silicon Valley of Ellen Pao’s discrimination lawsuit, of the forced resignation of Uber’s Travis Kalanick, and of a seemingly ubiquitous frat house atmosphere. In Lean In, she lays out and discusses in intimate detail the stumbling blocks she faced on her journey to the C-Suite. Sandberg’s book is indeed intimate in detail; she uses her own mistakes and insecurities as vivid examples, and she supports them with compelling data and research on the subject. Powerful writers and speakers do not just pass on a message to their audience; they inspire and motivate the audience. Powerful writers and speakers leave their audience with a feeling they cannot shake. Sandberg makes women feel capable. She tears down the instinctive tendencies women have to question our own abilities. She writes that, “When a man fails he points to factors like, ‘didn’t study enough’ or ‘not interested in the subject matter.’” But when a woman fails, her reasoning likely includes inherent lack of ability and unfitness. Self-doubt is an all-too-commonly seen self-defense mechanism. Sandberg makes women feel bold. The bright red signs in Facebook’s Menlo Park, CA headquarters read, “Fortune favors the bold”, “Proceed and be bold,” and “What would you do if you weren’t afraid?” The signs are not placed there without purpose. Be bold,” encourages Sandberg, because “opportunities are rarely offered; they’re seized.” These are the types of messages women must internalize and translate into action. Sandberg makes women feel ambitious. In a Hewlett-Packard internal report, it was revealed that women apply for open jobs if they think they meet 100% of the listed criteria. Men apply if they think they meet just 60% of the requirements. Sandberg states that women need to shift from thinking, “I’m not ready to do that,” to thinking, “I want to do that—and I’ll learn by doing it.” Sandberg makes women feel grounded. She recommends relinquishing the constant quest for perfection because it causes frustration and paralysis. Be a perfectionist in that which matters most, but embrace the “individuality that is honestly and sometimes imperfectly expressed” in true leadership. It is okay if a woman raises her hand and what she says is imperfect. What matters is the confidence she holds in her worth, her intelligence, and her ability to learn. Lean In is a vehicle to understanding the underlying forces of personality and place that shape the perspectives we assume and the positions we take. Lean In upends the feelings of reticence, tendencies toward self-doubt, or qualms about confrontation that are instilled in so many women from an early age. The business world can be relentless; match that relentlessness with your own insistence, your own confidence—your own niceness. Be relentlessly persistent. Take your place at the table, and raise your hand. Lean in, not out. By Jared Kofsky All across New Jersey, local, regional, and nationwide companies are planning to open new locations in both urban and suburban markets. Here is a look at some notable recent business news from municipalities across the Garden State, as initially reported on JerseyDigs.com. Shake Shack is continuing its expansion into New Jersey. The Manhattan-based chain of restaurants serving burgers, fries, frozen custard, and more just opened its first Essex County location along Route 10 and Eisenhower Parkway in Livingston. The new location, which is situated at the site of the former Margarita’s Mexican Restaurant, is within a new shopping plaza known as The Corner at Livingston Circle. Closer to campus, the company is proposing a new restaurant near the Quaker Bridge Mall at 3303 Brunswick Pike/Route 1 in Lawrence Township, according to a legal notice. The location, which would be built at the site of Patio World Home and Health, would be 35 feet tall and cover 3,622 square feet. Seventy parking spaces would be provided for customers. A new Shake Shack is also in the planning stages for opening in Evesham Township in Burlington County. New York Waterway may have ‘New York’ in its name, but New Jersey is where the Weehawken-based company has been focusing its expansion plans. The transportation provider, along with Mack-Cali subsidiary M-C Harborside Promenade, LLC, is in the process of constructing a new ferry stop along the Hudson River Waterfront Walkway near the Exchange Place PATH Station in Jersey City. The proposed terminal has already received approval from the Jersey City Planning Board, and is part of a $75 million rehabilitation and expansion of the Harborside complex. Service will be offered to Midtown West and Lower Manhattan. Pig and Khao, the restaurant on Manhattan’s Lower East Side serving Southeast Asian cuisine, now has an outpost on this side of the Hudson River. The business, owned by Leah Cohen and Benjamin Byruch, opened the Piggyback Bar on September 21st. Located at 200 Hudson Street in Jersey City’s Harborside development, Piggyback Bar successfully obtained Harborside Hospitality Corporation's liquor license earlier this year. The new 6,000-square foot location offers skyline views, an outdoor patio with 100 seats, and a menu ranging from watermelon juice to mapo chili dogs, according to Eater. YCS Investments, LLC is hoping to put ‘Trenton Makes’ back in the slogan ‘Trenton Makes, The World Takes.’ The company, which is based in Brooklyn’s Gowanus neighborhood, has applied for approval to open a manufacturing plant in a historic Trenton building. The two-story structure at 725 East State Street in the East Ward is slated to be converted into a facility that would make light fixtures. Parking would be provided for employees on the premises, according to a legal notice. This building is notable for the inscription reading 'Trenton Poster Advertising Company' atop a facade of the structure, a sign of the city's industrial past. The company merged with the R.C. Maxwell Company in 1923, according to Duke University, and created billboards along East State Street in this structure until 2000. By George Seitis Every once in a while, there comes a film that restores my faith in cinema as an art form. This summer, that film arrived: Christopher Nolan’s Dunkirk. Dunkirk recounts the World War II story of Operation Dynamo, the evacuation of approximately 400,000 British and French soldiers from the beaches of Dunkirk, France while the German forces inexorably closed in on them, picking the soldiers off from the air. In the hands of any lesser director, this film might have been synonymous with any of the many other cookie-cutter blockbusters that constitute a given summer film season. Gratefully, Dunkirk isn’t one of those.
Dunkirk deserves to be mentioned in the same breath as David Lean’s Lawrence of Arabia and Stanley Kubrick’s 2001: A Space Odyssey, two films that will remain classics for as long as humans value the cinema as an art form. Like those two classics, Dunkirk needs to be seen on as big a screen as possible, in as large a format as possible (preferably IMAX 70mm). While many audiences today can get by streaming most of today’s films on laptops and smartphones, doing so with Dunkirk would vastly diminish both the film’s impact and artistic merits. One such artistic merit is Hoyte van Hoytema’s miraculous large-format cinematography which somehow manages to capture the chaos of war austerely and with tremendous restraint. Another instantly noteworthy technical achievement is Lee Smith’s editing, which both trims fat from the film, and disassembles a simple linear story and reassembles it into something of a mean, lean, adrenaline-fueled film that wastes no time with backstory and instead focuses on the battle itself and the hell it truly was. But at the helm of the film is the man himself: Christopher Nolan, whose decisions as the film’s director are masterful. Nolan purposely refuses to show the Germans, and instead focuses on the evacuation through three distinct perspectives: the mole (the dock where many of the soldiers try to escape by boat, only to be bombed by German airplanes), the sea (a civilian ship that travels to Dunkirk to save as many men as possible), and the air (we ride along with Tom Hardy as he flies his Spitfire plane into peril, and tries to shoot down the German planes terrorizing the British and French soldiers). As mentioned before, in any other director’s hands this film would have been told linearly, which would have diminished the film’s quality; Nolan’s decision to let editor Lee intertwine the three perspectives into an unconventionally cohesive whole is part of what makes Dunkirk several cuts above any other war film in recent memory. As Nolan’s decision to interweave nonlinear storylines to compose a vast landscape of war suggests inspiration from the French New Wave era of filmmaking (particularly the films of Jean Luc Godard), his decision to focus on specific actions as opposed to grandiose battle scenes within these storylines mirrors the precise directing of French filmmaker Robert Bresson. Additionally, Nolan refuses to give many characters names; and while the film’s detractors could view this as a flaw, Nolan beautifully uses the tactic to put you, the audience in the role of the protagonist. It’s a micro war story told on a macro scale, which serves as the perfect metaphor for Dunkirk actually being an arthouse film disguised as a blockbuster. The film industry can--and should--take notes from Dunkirk. Unlike most Hollywood blockbuster films, Dunkirk proved to be a risky film to make; in an era of the cinema dominated by tentpole films, sequels, and superhero movies, Dunkirk uses innovative and unconventional directing techniques to convey a virtually “plotless” story told by an ensemble of actors, many of whom are acting for the first time. The risk involved was whether audiences were going to accept such an unconventional film in terms of Hollywood summer blockbuster standards. But they did, and this is thanks to two reasons: the first being Christopher Nolan himself. Nolan’s previous films include Inception and The Dark Knight, two films that were critically acclaimed and huge box-office successes. Audiences know what to expect when it comes to Christopher Nolan movies: films that are simultaneously complex, original and thrilling; yet possess wide audience appeal. The two dimensions are not mutually exclusive, and Hollywood studio heads should be aware of this fact if they want to increase profits. Recently, Dunkirk passed $500 million dollars in worldwide sales, so audiences still care about cinema as an art form and as a means of popular entertainment. The hope now is that studios increase the supply of these original concepts, which earn back their budget (Nolan made Dunkirk for $100 million) and much more (the only other original this year that achieved box-office success like Dunkirk was Edgar Wright’s original Baby Driver), and make more films that audiences clearly want to see. |