GAAPPosted: September 22, 2011
GAAP is the abbreviation for Generally Accepted Accounting Principles. After law school, I worked for KPMG-Omaha as an auditor and tax accountant. I’ve lost much knowledge since I haven’t been in public accounting for some time, but I can still kinda speak the language. (Cue DK or Stu or Pete or some other sharp accountant to flame me in a minute.)
A common line item on a balance sheet is Accounts Receivable, which, as the name implies, is an asset. Someone owes you money. (That Someone’s balance sheet has an Accounts Payable line item.) You’ve provided a product or service and completed the work and now await payment.
My and your lives have Accounts Receivable. We’ve done stuff for ourselves and others, and we’ll be paid back at some point–whether today, next week, next year, or in 4 decades. Building one’s life means considering what type of A/R we’re generating. And normally, good A/R is tough to build. Workouts are hard if done well. Workdays require effort, persistence, and concentration. Raising littler people correctly may be the toughest A/R to generate, but think of the payoff. Work and think hard. You’ll build good A/R.
OK, enough seriousness.
When my nephew Zach was 3, he rode with his dad to a jobsite in the country. (Recall that Bill drills water wells.) They passed a hog farm.
Zach: Ew, dad, that stinks (in 3 y.o.-speak).
Bill: No, son, that smells like money.
Subsequently, Bill and Wife Tonya go to Vegas. Uncle Dan gets one day of prison duty with Zach. We’re watching TV when he beelines to the bathroom off the living room. Upon completion of his task, Zach stands in the doorway, staring at me. After I tell him that he’s too old to require an assist, he turns back to the toilet, leans over, and takes a mighty wiff.
Zach: Smells like money!!
Here’s the Z-Man now with his Taylor Swift lookalike girlfriend.