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When I look at all this bollox above I can only say that bloke Luca Pacioli has a lot to answer for. For the uninitiated, Pacioli was the Italian monk who invented accounting many moons ago. It is all his fault, when you kept your business takings in a bag under your bed things were much simpler. And in case you think accounting is scientific, just have a look at:

https://en.wikipedia.org/wiki/Accounting_scandals

Enron, Lehmans, etc etc. The list is endless. Us accountants have a lot to answer for!

leetufc wrote:Matt, I haven't got time this morning to answer all your points, but hopefully will do later. Let me just give you an example of why we do things the way we do rather than your way.

You set up a company this year, and you make £2million sales, all received in cash. To make those sales you buy goods for £3million but all on credit, so we haven;t paid for them yet.

On your basis of including everything when you pay for it, your accounts show that you make £2million this year from no outgoings, which is a minor miracle, when in actual fact you've made a loss of £1 million.

I then look at your accounts and see your wonderful money out of nowhere company, and because I'm naive, I buy it without spending time examining your business. I then find out that not only does your business makes a massive loss rather than a profit, but that I also owe your £3 million debt on credit purchases.

Therefore to avioid this happening we show that £3million as costs in the accounts (even though they haven't been paid for but to reflect how much you have theoretically spent making your sales) and a liability of £3million on the balance sheet as you owe this money.

As said, sorry I haven't gone into more depth but hopefully will have chance later, unfortunately i've got a mock exam this morning which I probably should be last minute cramming for

dont worry lee, he still wont get it.
i think matt needs to just stick to law.............

Afternoon Lee,

So, do I correctly infer from your above example that we go to all this trouble, all this time and expense and complexity, in order to protect Mr Bean from himself and stop him buying companies he doesn't understand? Juice doesn't seem worth squeeze, if you ask me.

As for you, Super...

Matt.

Did you see, by the way, Supes, that your boy was PNEFC's top scorer last term, with the grand total of 11 goals?

ferrarilover wrote:Afternoon Lee,

So, do I correctly infer from your above example that we go to all this trouble, all this time and expense and complexity, in order to protect Mr Bean from himself and stop him buying companies he doesn't understand? Juice doesn't seem worth squeeze, if you ask me.

As for you, Super...

Matt.

Did you see, by the way, Supes, that your boy was PNEFC's top scorer last term, with the grand total of 11 goals?

never in doubt........... :} =D

Well he IS ex-Barnsley.

All their players are destined to do well in the lower leagues............................

Matt. The joy of doing annual accounts means that you revisit it every year to see if your previous assumptions are still applicable.

Oh, for what it's worth, transfer fees for players are amortized over the length of their contract and are impaired etc for injury, going to jail etc. Standard accounting treatment for intangible assets.

ferrarilover wrote:Afternoon Lee,

So, do I correctly infer from your above example that we go to all this trouble, all this time and expense and complexity, in order to protect Mr Bean from himself and stop him buying companies he doesn't understand? Juice doesn't seem worth squeeze, if you ask me.

The example was just one way of explaining the concept of why we do things. There are many reasons for preparing accounts the way they are. One of them being the above example - many ordinary people buy shares and need an easy way telling how well/badly the company in which they buy/own the shares are doing.

Another reason is comparability. Accounts are all prepared using the same principals so you can easily compare two different companies. With your method you could have large distortions between companies and it would be difficult to identify any differences between the two.

Accounts should also be consistent to clearly identify how well a business is improving or how poorly it is performing. To do this you need to apply the same principals year on year. Other you get wild fluctuations that are unexplainable.

Very large companies have to prepare a statement of cash flows in their accounts, showing the movement in the year to cash (which takes out estimated figures such as depreciation) which is essentially what you would like to show. Torquay aren;t large enough theat they are required to have this disclosure.

The concept is a matching principal - you want to match relevant expenses to relevent income. An asset will generate income over a period, so you match the expense for a period. Same as if we received a sponsorship deal for three year but were paid all the money in a lump sum. The income would be split equally over the next three years accounts.

Well, Lee, I can do little more than wish you the best of luck in what seems to be an impossibly complicated career.

In your expert opinion, are the club up creek without paddle, or are we alright?

Matt.

You can tell its post season with a tit for tat thread such as this!!

Accounting - yawn

I think what Matt really wants to know is the EBITDA. Perhaps someone knows and and explain it to him

PlainmoorRoar wrote:You can tell its post season with a tit for tat thread such as this!!

Accounting - yawn

Yes, it's such a shame that you're being forced to read it, presumably at gunpoint...

In the interests of fact checking, has anyone got access to the accounts (or whatever they're called) to see if we are in the poo or not?

Matt.

You can spend £1 on obtaining them online from Companies House....

They tell you nothing of interest Matt and as TUFC are a relatively small company, are worthless without the underlying information. Deja Vu! Ho hum......

Steve beat me to it. Torquay are a small company so are only required to submit abbreviated accounts which don't show all the information to the general public, so it's hard to get any information of great use.