Archive for the Accounting Category

Beauty and the Beast

Posted in Accounting with tags , , on December 16, 2011 by jrvitalis


We recently bought tickets to take the girls to Beauty and the Beast. The night before the performance, we decided to watch the movie so that the storyline would be fresh in all of our heads. I had no idea that the experience would be loaded with learning opportunities for the girls, who were bouncing off the walls and giddy with excitement.

 

Not long after the movie started, I couldn’t resist asking Puppy what she thought of Gaston.

 

With her eyes glued to the screen, Puppy was quick to denounce his priorities. “All he cares about is beauty. He’s not a very nice guy.” She thought for a second. “And Belle is smart. She cares about books and learning.”

 

That’s when my husband jumped in. “That’s what you call a misalignment of goals.”

 

He started to explain, but it was clear Puppy had already moved on. And while I liked my husband’s take on Belle and Gaston’s relationship, I was pleased Puppy had made a connection, on her own terms, about their values.

 

Later, I got each of us a bowl of ice cream. Before I could pour chocolate sauce on my husband’s bowl, he jumped up and pulled out the caramel sauce. When I set Puppy’s chocolate sundae in front of her, she looked over at her dad’s and exclaimed, “Hey, no fair! If I had known there was caramel sauce, I would have asked for that.”

 

Again, my husband piped up. “That’s what is known as information asymmetry.”

 

This time, Puppy demanded an explanation. As I sat listening to them banter, I realized we still had more than half the movie, not to mention the entire play, ahead of us.

 

Who knew Disney could be so educational?

 

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Risk Appetites and Corkscrews

Posted in Accounting with tags , , on July 15, 2011 by jrvitalis

Given that my husband specializes in ERM (Enterprise Risk Management), risk is a frequent topic of conversation around our house. Most of our discussions revolve around his dissertation, but occasionally something happens to make the topic more personal.

A few weeks ago, for example, we took a family vacation. While at an amusement park, Puppy insisted on riding the corkscrew (an upside-down roller coaster). Although she’s not yet seven-years-old, I’ve been putting this off for almost four years. It all started at the Mall of America when she was three. It was the end of a long day, and I was trying to get Puppy and Kitten out of the mall without a meltdown. They were both begging for one more ride. Trying to make a joke, I pointed at the roller coaster that went upside down. “Okay,” I said. “You can go on one more ride, but it has to be that one.”

“Yes,” Puppy exclaimed, pumping her fist in the air. “I’ve been wanting to do that one!”

At that point, I had to backpedal. Thankfully, she wasn’t tall enough to go on the ride, which made things easier for me. Unfortunately, she never forgot the conversation and she’s been bugging me to take her on a roller coaster that goes upside down ever since.

This time, Puppy checked the height requirement on the corkscrew before asking. Since she was well over the mark, I really didn’t have a choice. I finally agreed to let her ride, but on one condition—I wanted to ride with her. (Yes, I’ll admit, in the back of my mind I was picturing me reaching over and holding her in the roller coaster in the event she actually started to fall out while looping upside down. Ludicrous, I know, but I’m a mom and that’s just how our minds work.)

We loaded on the roller coaster and I checked and double-checked her seat belt. Just before taking off, I leaned over and checked it one more time. I don’t have a problem with corkscrews myself, but riding on one with my six-year-old was another matter entirely. By the end of the ride, I was shaky, queasy, and convinced that I was a horrible mother (After all, what kind of mother would put her daughter on a ride that risky?).

My only hope was that she was as scared riding it as I was letting her. As the ride pulled into the station, I leaned over and looked at her. “Well, what did you think?” I held my breath, waiting for her answer.

She beamed. “Can we go on it again?”

That’s when it hit me—now that I was a mom, my risk appetite had decreased dramatically. I had a tough choice to make—let her go on the ride again, or follow my instincts and tell her one ride was enough.

My answer? “Yes, you can ride again, but this time, take your father.”

Thankfully, his risk appetite is much higher than mine. From now on, I’m sticking with the kiddie rides.

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LIFO, FIFO, and Girl Scout Cookies

Posted in Accounting with tags , , , on January 14, 2011 by jrvitalis

While inventory accounting practices such as LIFO (last in, first out) and FIFO (first in, first out) might not matter much to a household from a cost perspective, they are certainly practical to keep in mind for other reasons. Take my refrigerator, for example. At any given time, I’m likely to have somewhere between one and three containers of plain yogurt (we’re a big smoothie family) in the fridge. Obviously it wouldn’t make sense for me to use the container that I bought last (which would have a later expiration date) when making a smoothie; instead, I’d be better served to employ a FIFO strategy by using up the yogurt in the order in which it was purchased.

Technical and accounting issues aside, inventory management is necessary for other reasons as well.

Take the Girl Scout cookies that were delivered to our door recently. When they arrived, we had a house full of guests. In the flurry of trying to find my checkbook, entertain my guests, and prevent our 65 pound lab from wetting herself due to all the excitement, I managed to lose track of the actual bag of cookies.

It wasn’t until several nights later that I remembered the cookies had been delivered. (And let’s face it, once you get the thought of Girl Scout cookies in your head, focusing on anything else becomes futile).  After checking our pantry and the freezer, I wandered into my husband’s office. The conversation went something like this:

Me (with my hands on my hips): Where are they?

My Husband: Where are what?

Me: Don’t give me that. Where’s the stash?

It wasn’t until we went through several rounds of this that I realized he really and truly had no idea what I was talking about. Perplexed as to where the cookies might have disappeared to, I started searching. They weren’t in the kitchen, the living room, the front hall, or any other place I imagined they might have been left.

That’s when it dawned on me. I tiptoed into Puppy’s room, where she was sleeping soundly. First stop, the closet. No cookies there. Second stop, behind the rocking chair. Nothing. Finally, I bent over and looked under her bed.

Jackpot! She had ditched the bag and stuck the entire stack of (still unopened) boxes under her bed.

In the future, I’ll be a lot more careful to manage my inventory of Girl Scout Cookies. For now, I can’t think of any better way to keep track of them than to store them in my stomach.

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Linguistics Matter!

Posted in Accounting with tags , , , , , on December 10, 2010 by jrvitalis

Counter intuitively, linguistics are actually incredibly important in the study of accounting. Take debits and credits for example. While we all think of a debit as a withdraw and a credit as a deposit, in the field of accounting, this is technically inaccurate. When you get to the Ph.D. level, these types of differences become even more stark. One of the biggest challenges for my husband over the last four years has been to learn to use language in an incredibly precise manner in order to accurately describe his accounting studies and analysis.

Last week, I learned that linguistics are also incredibly important when raising children. We were at a friend’s house, who I’ll call Squirrel due to the fact that he is constantly busy with projects, for a play date. Walking upstairs to check out Squirrel’s new bunk bed, his mother and I were dismayed to see Puppy and Squirrel launching themselves off the bed.

“No jumping off the top bunk,” Squirrel’s mother directed.

Puppy paused. A strange look crossed her face. “We weren’t jumping,” she said.

I knew that more precise language was required. “By no jumping, we mean no slipping, sliding, diving or otherwise exiting the bunk by means other than the ladder. Understood?”

With a sheepish grin, Puppy looked at me and nodded her head. Judging from the look on her face, I knew this wasn’t the first time she’d played games with linguistics –  just the first time she’d been busted. I’m going to have to be a lot more precise with my language in the future.

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Chocolate Pancakes and Cash Balances

Posted in Accounting with tags , , , , on June 11, 2010 by jrvitalis

While making chocolate pancakes for Kitten’s third birthday, I realized we had reached an important milestone in our household. The days of tenderly rocking infants and chasing after squealing two-year-olds are over. At three-years-old, Kitten is no longer an infant, a baby, or even a toddler – she is officially a “big girl.”

For some reason (yes, sadly, this really is how my mind works), this reminded me of my accounting class at CBS. According to the professor, examining a company’s financial statements can provide important clues as to their maturity. For example, rapidly increasing cash balances most likely indicate a young, rapidly growing company, whereas a solid, mature company will more likely have fairly steady cash balances.

It occurred to me that, in much the same way, the items in our home signal Kitten’s location in her developmental cycle. Just a short year ago, our home was filled with cribs, pack ‘n plays, high chairs, bibs, and an assortment of toys strewn across the living room floor. Walking in the door, it was impossible to miss the fact that a child, and a young one at that, inhabited this household.

Now, Kitten sleeps in a “big girl” bed, sits in a normal chair at the dinner table, and no longer wears a bib. Okay, the toys strewn across the living room floor haven’t changed much, but these, too, are important indicators of her developmental status. Gone are the days where I have to monitor her every activity, knowing for certain that the moment I let down my guard, she will shove the nearest nickel-sized object into her mouth. Instead, she plays with delicate paper dolls, sets up elaborate make-believe worlds, and even pours her own breakfast cereal.

Yep, it’s official. My baby has definitely turned into a “big-girl.”

Then again, as we finished our pancakes I glanced at Kitten across the table. She beamed at me, her still-chubby cheeks smeared with chocolate syrup. Looking at her ten chocolate-coated fingers, I suddenly felt a lot better. My baby isn’t quite grown-up yet, after all.

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Don’t Forget to Manage Your Assets

Posted in Accounting with tags , , , , , , on March 30, 2010 by jrvitalis

For many companies, proper asset management plays a critical role in the ongoing viability of the company. Consider U-haul, or a car rental company for example. With an enormous fleet of vehicles, properly managing these assets to ensure that they are being properly utilized is a monumental task.

But managing the physical location of an asset is just the tip of the iceberg – there are a myriad of other issues to consider: depreciation and tax issues associated with the assets, maintenance issues, the lifecycle of the asset, etc.

Managing assets within a household can be an equally complex process. With respect to children, asset management often focuses on toys and clothing. If you have more than one child, this issue becomes even more complicated. Does the following scenario sound familiar?

“MOM!” Puppy’s scream shatters the windows in my living room. I sprint toward the play room, sure that she must be on the brink of death.

Stopping in the doorway, I quickly size up the situation. Other than the fact that her face is bright red and the vein in her temple is about to explode, Puppy is putting together a puzzle on the floor and appears to be fine. Kitten is sitting on the other side of the room, her back to Puppy, happily playing with a doll.

“What’s going on?” I ask.

Puppy turns on the tears. “Mom! Kitten stole my doll. And I was playing with it.”

Now Kitten pipes up. “No! Got it off shelf!”

I could launch into the “You called me in here for this?” speech, but the bottom line is that I’m already in the room, and with tensions running high, I determine that that might be a conversation better saved for another time. Instead, I turn to Puppy.  “It looks to me like you are putting together a puzzle, not playing dolls.”

Puppy crumbles. “But I was getting ready to play with the doll!”

Regardless of who had the doll “first”, the bottom line is that both girls want the doll. Two girls. One doll. Asset management.

In general, I try to stay out of the middle of the two girls squabbling, and for the most part they do a pretty good job working out compromises themselves, but sometimes I can’t help but give Puppy a few pointers. Pulling her aside, I point out that Kitten’s attention span is about 30 seconds. Sure enough, by the time we return to the room, Kitten has tossed the doll aside and moved on.  

Asset management can occur on a more macro scale within a household as well. Decisions you make involving your homes, your furniture and your vehicles all involve asset management. When we moved to Madison in order for my husband to attend UW, we found ourselves in need of a creative solution for how to manage our vehicles. Living only six miles from campus, and knowing my husband wasn’t going to have to go to campus every day, it didn’t make sense for us to have two vehicles. On the other hand, we do live in Wisconsin, and riding his bike to school in the dead of winter wasn’t the most appealing option for my husband. Our solution? Check out the picture below.

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Amortization is Your Friend!

Posted in Accounting with tags , , , , , on March 15, 2010 by jrvitalis

Anyone who owns a home is familiar with the concept of amortization – the process of breaking up the purchase price of a house into manageable payments. Businesses use amortization schedules too, both in terms of financing acquisitions and equipment, and to calculate tax depreciation. For example, instead of deducting a new piece of office equipment all in one year, the tax depreciation is taken in smaller increments over future years, matched against future revenues this piece of equipment is likely to bring in to the office.  

Believe it or not, when it comes to parenting, this is a handy theory to have tucked in your back pocket.

Imagine you are in negotiations with your husband about whether or not you are going to spend some ungodly amount of money on a Halloween Costume for your precious little bambino. Your conversation might go something like this:

(You): She has to have this costume.

(Your spouse): She’s 3 months old. Why does she need a costume at all?

(You): But honey, it will look sooooooo cute on her!

(Your spouse): It’s too expensive.

This is where you get to pull out your hole-in-one.

(You): Sure, for one kid. But we’ll be able to save it. We can use it for kid number two. And who knows how many kids we’ll end up having. It’ll totally be worth the money.

At this point your spouse will turn white (or maybe green?) at the thought of more – possibly many more – kids, and will agree to anything, just to get you off the subject.

Bet you never thought accounting could be so much fun, huh?

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