AccountingScape

Making numbers talk

A twelve-week introduction to financial accounting, built around two businesses rather than a textbook.

Producing the accounting numbers is the smaller half of the work. The larger half is using them: reading what a set of statements says about a business, noticing what it leaves out, and reworking it until it answers the question you actually have.

Each universe is one business, followed episode by episode. You work on its numbers, you are asked what the people running it are facing, and the class decides. The decision goes into the books, and the next episode opens from what was chosen.

Record it Enter the transactions and the year-end adjustments. Every attempt is checked against the key and told what is wrong — unbalanced, wrong side, wrong amount, an account that does not belong.
Read it Statements, ratios, cash flows, and the arithmetic of what moved them. A change is traced to its causes rather than described.
Rework it The reported figures are a starting position, not an answer. Strip out what will not recur, put back what was left out, and decide what the business is really earning.

Two universes, six weeks each

Finca Esperanza Ltd.

Weeks 1–6 · a coffee farm in Costa Rica · inside the business

You inherit a hundred hectares of coffee from a relative you never met and run it from Canada. Carlos runs the farm. You build the accounting system from nothing and find out what it can and cannot see — when a sale counts as made, what the old trees are really giving, who checks that the figures are true, and what the neighbours downhill have to say about the water in their well.

1 Building the system, and who checks it 2 The first full year, and the old block 3 Selling a crop before it is grown 4 When is a sale a sale 5 The well, and who pays for it 6 Paying Carlos, and checking the numbers
3 of 6 episodes built 71 journal entries 21 entry types a generated quiz to practise on
Enter the finca →

The mining company

Weeks 7–12 · outside the business, looking in

No journal entries here. You are given the statements and nothing else, as an outsider is, and the work is making them useful: building the cash flow picture, asking what the reported earnings are a proxy for, and deciding what you would pay for the thing. Along the way, the communities living beside the mine have a view of their own, and it does not reach the accounts except as a cost.

1 Reading a set of statements cold 2 Where the cash actually went 3 What the assets are expected to earn 4 Numbers, expectations and the share price 5 What the mine costs the valley 6 Free cash flow and the quality of earnings
in preparation
See how universe two will work →