This past weekend and week have been super busy. I’m home sick today, so trying to get a few things done before the tylenol kicks in again! So far, I’ve gotten my cover letter and resume off to the University of Texas. Hopefully they’ll get there before March 1st! Although apparently they’re still missing my transcript even though my university sent it last month.

Anyway, on to VITA!

This year I got moved from the easy table to the hardest table. Luckily, I was paired with a tax senior manager so I just sat there and listened to our clients speak while he did the taxes.

So my main takeaway from this year is-be prepared to hear some stories. People often like to tell their intimate troubles to strangers, because sometimes it’s easier to tell people private issues you have when you know you’ll probably never see them again.

I think that since we, as tax preparers, are already getting a whole lot of private information, that opens people up to share their private stories too. I just tries to listen attentively. Definitely, try not to be shocked when people share some gory details-after all, you can forget about them the next day too, the same way they will forget about you.

Photo by bbsc30 @ flickr

My ideal job, while I am still yong without my own family, would involved living in a foreign country for a year to two years, and then moving on to another one. I am not picky about wanting to be in western Europe, or English-speaking countries. I would be quite happy in Latin America or eastern Europe.

So I tried inquiring about what kinds of skills or clients I should work on to make me a better candidate for international options. So far, everyone’s answer has been that you only get a chance to travel internationally once you reach the manager level, and that there’s nothing you can do to change this.

I’ve decided to stay optimistic, and be skeptical of this advice. There must be some sort of area I can gain expertise in that would make me especially useful for working in international offices. I just have to figure out what that might be. Any ideas?

Atlanta’s MARTA is always good for an interesting event. Most recently, I’ve ridden it to get to and from work though, and commuters are very boring travel companions. Today I travelled into the city in the morning, for some more VITA training, and rode it back out to the client site around 11. There are a lot more interesting characters loitering on the trains at that time of the day. Too interesting for my imagination to handle apparently.

So I’m sitting, the train starts moving, and a tall guy comes pushing through the doors from the next car up. Now, people don’t usually use those doors to move between cars, especially when there are lots of open seats. Now this guy looks MAD. Really angry.

Then, he starts telling us something. I can’t tell what, since he’s mumbling a bit, but he’s saying he needs something from us.

Oh my god, I think, we’re getting held hostage.

No one around the guy seems too bothered, so I decided it couldn’t be what I thought. Then he starts walking over to me, and the girl in front of me holds out her cellphone to him.

We ARE being held hostage! I think, He’s taking our means of communication and our wallets!

Turns out, he just wanted spare change, and she was handing him some, while holding onto her cellphone in the same hand.

So that was a relief.

I gave him a dollar, even though he was just asking for 25 cents, because I was so happy he wasn’t going to shoot us.

Purpose of this tutorial:

My sister is a law student, but has to take a financial accounting class this semester. Being a law student, she is smart, of course, and after she understood the first basic concepts, she didn’t need any more help from me. However, sometimes the hardest part of financial accounting is understanding it at the very beginning.

With this post, I’m going to try and explain t-accounts a little differently than your textbook might, because sometimes a different way of explaining things can make it clearer.

This is Part 1. It will discuss the basics of how to set up and use a t-account, so you can get the idea for how to use it.

Part 2 will discuss technical terms, which your textbook will probably throw around right from the first page, like debit and credit. Try to understand Part 1 before reading about how the terms are used.

Welcome to T-Accounts

Companies keep track of the different amounts of stuff that they own, earn, owe, etc, in separate accounts. This is similar to how you might keep track of your own cash in your checking account. However, businesses keep track of the cost of the buildings they own, the money people owe them, the work they owe other people, and many other things, each in their own separate account.

Anatomy of a T-account

1. Draw an upper case T
   
2. Write the name of the account (stuff you’re keeping track of) on the top of the T.
   
3. When you GET cash, write it on the left side of the T. When you PAY cash, record it on the right hand side. WARNING: Some accounts are the opposite-they increase on the right and decrease on the left. More on this later.
   
4. T-accounts show their usefulness when you have more than one in-flow and outflow. Let’s say in one week, you got a $10,000 paycheck (inflow), but then you buy a new tv ($2,000 outflow), spend $100 on groceries (outflow), pay your cable bill ($200 outflow), and get a birthday check of $50 from grandma (inflow.) We can record each of these in the t-account as they happen.
   
5. Now, at the end of the week, we total up all of our inflows and outflows. In algebra, we would write this as:
   10,000 + 50 – 2,000 – 100 – 200 = 7,750.
   
   In a t-account, you write the balance ($7,750) under the larger side. Of course, with cash, it will always be on the left, because you can’t have negative cash, but some accounts can go either way. Most accounts will have a side that is naturall almost always larger though. That is called their “normal balance.” So cash has a “normal balance” on the left side.

First of all, T-accounts are not as complicated as you might think. They confuse people, I think, because you can do the same calculations with a more familiar algebraic expression, or just a column of addition and subtraction. However, when you are recording transactions over a long period of time, like how in real life you would record transactions all during the month, then the t-account is a convenient way to store information.

VITA is Volunteer Income Tax Assistance. You do all this training, and voila, you are certified to help people who meet certain criteria file their tax returns.

I planned to finish this training today, but I am only on slide 104 of 159. “But Kel!” you say, “That sounds like you’re nearly done!”

Ah yes, nearly done with the third topic. Of approximately a million topics. Or maybe more like 50. But still, not even close.

I would just take the test, and see if I pass, but I keep failing the mini-quizzes that come immediately after the topic I’m quizzed on. Nevertheless, I’m confident I can fill those taxes out correctly!

Update: I went ahead and just took the test and used IRS.gov to help me along. I magically passed! First try! I thought for sure I would fail because you have to calculate exact numbers for some, but it seems like I actually got those ones right, and got the parts I studied wrong. Go figure!

I participated in this program last year, and none of these topics came up. Although I am doing the “basic” certification, the issues are far more complex than any I was faced with last year. For example, they are teaching us about who gets to claim someone as a dependent if like 5 people all contributed to that person’s support during the year.

Last year my partner and I got all of the dependent children, so that was a snap. Oh, and a sweet old man who had only military income, and no dependents or anything. Dependents make taxes complicated!

I will be doing the VITA day next Saturday, so I’ll be sure to post about it!

I haven’t written much about my daily tasks, which I know I was really curious about as a student. Also, I need to write a paper about my intern experience, so I’m supposed to keep track of what I do. Honestly, so far it’s been a pretty different experience depending on the job I was on.

Dirty Work

I have had to make a few copies in the last few weeks. Someone has to do it, and we don’t take an administrative staff with us to a client, so whoever is the least busy, which is usually the intern, gets to do it. This kind of work doesn’t bother me at all. It’s kind of nice not to be staring at a computer screen for a bit.

This kind of work, for all it’s mundane-ness, can be tricky. It is really, really bad to mess up on who gets mailed what, or where hard copies get stored. People get concerned about their own private data if you accidentally mail someone else’s to them. If you store a hard copy in the wrong place, it may never get found. So make sure you pay as much attention to this job as you would to one that feels more “important.”

Monotonous Work

This is what I’ve been doing for the past couple of days. It feels like more direct audit work than copying, but it is very repetitive and detailed. It can get monotonous, it’s easy to screw it up (actually, I did a little bit, but I’m told it was easy to fix.) So be careful.

The client I’m working at right now is huge, with a bunch of subsidiaries. I have to match subtotals on the income statements and balance sheets that we’re using for our testing, to a giant consolidated income statement and balance sheet broken down by companies. I’m not sure where the glitch comes in, as they are based on the same raw data, but some accounts are in the wrong categories in our broken-down balances, and I have to check each little number for that, and figure out where it should’ve been put.

With this kind of work, I tried to keep in mind that everyone on the team with be using this workpaper, and they will notice if I don’t do it perfectly. Also, when I did find errors, I got my manager to teach me how to fix the files myself, rather than relying on him to do it.

Also, I have done much more boring work in the past for no pay or minimum wage. If it feels like a monkey could do it, be glad they’re not paying you a monkey’s wage to do easy work!

Audit Work

I have gotten to do a lot of regular work on the audit itself so far too. It mostly entails selecting a sample from a population, for example, unpaid invoices, and looking through payment schedules to make sure that those invoices are truly unpaid. You get to look at lots of invoices, check details, and shipping documents when you’re doing the actual testing.

Your accounting background will help you understand what the test is trying to check and why. For example, if something is recorded as a prepaid expense in December, it had better relate to an expense during the following year or so-and not the period before December. (Otherwise it should just be recorded as an expense, not a prepaid expense.)

Really, this covers the general type of work I have gotten to do pretty well. I won’t give specifics of exactly WHAT we do to test things, because I think all firms have their own methods for how they set up their workpapers, etc.

I’ve always had this vague desire to run my own business. The problem is, it’s business itself that I’m passionate, not any particular craft or trade. That’s why I decided to go into accounting, because you get to work with the foundation and underlying parts of the company that make it all run. Also, in audit, you get to work at several different clients, which suits my attention-span more than committing to my own start-up.

A successful start-up takes a lot of work, dedication, and even then is likely to fail. I honestly don’t feel innovative enough to be an entrepreneur like the guy who started Starbucks, etc.

A lot of the big companies we work on seem to form by just buying up a bunch of other companies, packaging their products together, and not actually making anything new. That takes a huge amount of existing capital though, and of course, you would need to be pretty familiar with an industry to see how to pull off something like that.

If starting a business were something I really wanted to do, I am seeing how working in something like public accounting gives you the opportunity to learn about industries, make connections, and get some real-world experience. So if you want to run your own company someday, here is my vote for majoring in accounting!

I’m planning to go to Italy for a couple weeks after my internship is over, but I suddenly realized there’s a lot of planning I still need to do.

Also, spending so much of my internship money is making me worry. Should I save all of it? With compounded interest, a few thousand saved to day can make a big difference in the future.

However, I won’t have much freedom to travel when I have a real job, so do I want to let these last few months of my life where I have time to travel pass me by? Also, if I didn’t spend it on a trip, I could spend a few thousand dollars very quickly if I didn’t stash it somewhere that I can’t touch it. A Blackberry here, a Kindle there… there’s $1000 gone already!

So, this will be my first time really travelling alone, and planning it is a bit stressful. I have been to Mexico, but I didn’t really travel around it, and the little travelling I did was organized by a guide.

Right now, my big dilemma is Rome. It’s a big must-see city for Italy, but it’s a bit out of the way from the rest of my stops, and I’m not sure I’ll have fun in such a big city alone. Also, if I go with a friend to Italy in the future (and I hope to go several times in my life), there’ll be some important bits I haven’t seen yet.

I’ve almost rationalized my strange aversion to including Rome in the trip, haha.

Now I see all these big shots whinin’ on my evening news
About how they’re losin’ billions and how it’s up to me and you
To come running to the rescue
Well pardon me if I don’t shed a tear ‘cause they’re selling make believe
And we don’t buy that here

- John Rich, “Shuttin’ Down Detroit”

I know everyone else is already up in arms about this, but bonuses? To bankers? Shouldn’t they have been fired already anyway? Bonuses are usually a formula based on meeting certain objectives for the year, and there’s no way the banks met their goals this year, thus, there should be $0 in bonuses.

I like Obama’s move to limit their pay to $500,000.

• Without the bailout money, these bankers should be out of a job entirely. (They’re getting it because they would go out of business otherwise, right?)
• They can either move on and find a new job like they would’ve had to if the bank went under, or they can be grateful that they’re still getting paid at all.

So of course, then there are the infamous comments about how $500,000 isn’t very much money. And maybe these guys will be in dire straights with so “little” money. Perhaps they own a $50 million house, and can’t afford their mortgage payments.

So I think the real takeaway here is, live below your means. If you and your spouse both earn $50,000, then you have 2 fairly comfortable incomes (depending on your location, kids, etc.).

• Don’t be like those bankers. If one spouse loses their job, or gets sick, you shouldn’t feel like you’ve been reduced to poverty. $50,000 is still a good amount to live on.
• You will run into problems if you were already pushing your combined income to the max, and now you have dropped to half of that. That’s probably what happened to the bankers with their $20,000,000 incomes.

I don’t that you need to be a miser to live like this.

• If you keep your monthly bills (mortgage, utilities, insurance, cars) to an amount that can be paid with one salary, in a pinch, then you can use the rest to pay your mortgage off faster, or splurge on vacations, clothes, eating out. The difference is, you can cut your spending on groceries and vacations, but you can’t cut your monthly mortgage bill down below the minimum payment.

So, if you are outraged like I am, keep in mind that if you are living above your means, or just at the limit, you might run into the same issue as them if you had a pay cut!

Photo by John Althouse Cohen @ Flickr

So, as part of getting course credit for my internship, I have to write a 5 page “evaluation” paper, a sort of summary of what I did, what I learned, etc. However, the main assignment is a 15 page paper where I have to address a current issue in accounting. Since the assignment title is “Issues and Solutions” I suppose I have to come up with a solution too.

A glaring issue right now is how accounting firms are dealing with the recession. However, I’m not sure that cutbacks in spending are really an “accounting” issue, and I don’t know if I can write 15 pages about it. Someone else suggested writing about the shortage of accountants, especially in regard to 2010. I need to investigate that a bit but a google search didn’t turn anything up at first glance.

I had a dream the other night that I came up with a great topic, but I couldn’t remember what it was when I woke up!