A blog I follow posted a link to a study on soda consumption. Being a faithful Mountain Dew drinker I took a look. Yikes, it would take me 50 minutes of jogging to burn off a soda! That’s about 50 minutes more than I currently do!
Then I started thinking this sounds a lot like accounting. Accounting is essentially a big hunk of data. Similar to slapping the number of calories on the back of a soda can, the fact that the company spent $1,859.49 on office supplies last year doesn’t mean much unless it is put into meaningful context.
- What if that expense doubled from the previous year? Did you expect that?
- What if it declined, but you expected it to be under $1,000 for the year because your company went paperless last year?
- How many customers or transactions does it take to make $1,849? Is that more or less than you thought?
Does your accounting system tell you any of this? It should.
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