The 30 Day MBA

Your Fast Track Guide to Business Success

Colin Barrow

• Publisher: Kogan Page
• Year: 2019
• ISBN:
  9780749482961
• Edition: 5
• Topic: Business
• Subtopic: Leadership
• Index: Business

If you want to accelerate your career development and transform your skillset, but without the price tag and two-year commitment of the MBA, this is the book for you. The 30 Day MBA covers the 12 core disciplines of business: accounting, finance, marketing, organizational behaviour, business history, business law, economics, entrepreneurship, ethics and social responsibility, operations management, research and analysis and strategy. It provides the tools and techniques you need to seize business opportunities and implement strategies successfully. Complex concepts are explained in simple and practical terms, helping you to apply high level concepts to the real-life world of business. The 30 Day MBA also contains insightful case studies from leading organizations including IKEA, Cisco, Cobra Beer, Heinz, Shell, Hotel Chocolat and Chilango, to help keep you right up-to-the-minute with current trends and inspire you to explore new concepts. This book equips you with essential hard knowledge, but also helps you understand how business and current thinking is shifting in today's turbulent global markets, and broadens your mind with the knowledge and confidence to excel in a competitive career.

01

Accounting

• Accounting conventions and principles
• The bookkeeping process
• Cash-flow forecasts and statements
• Calculating profit
• Balancing the books
• Finding financial facts
• Business ratios

Popping ‘accounting fraud’ into Google in May 2018 came up with ‘About 2,820,000 results’. The Ten Worst Accounting Scandals of All Time (http://www.accounting-degree.org/scandals/) has Lehman Brothers as their penultimate entry. The catastrophic implosion of Lehman Brothers had, in part at least, been brought about by an accounting trick known in the trade as Repo 105. With the approval of their auditors, Ernst & Young (E&Y), Lehman managed to make US $50 billion (£32bn/€66bn) of debt invisible and in effect disappear from its balance sheet. Carillion plc, a British multinational facilities management and construction services company, paid KPMG to act as auditor for 19 years, at a cost of £20.2 million and PwC, Deloitte, and Ernst & Young some £60 million for advice. Nevertheless they still went bust in January 2018 and according to the judgement of a British MPs select committee ‘their accounts were systematically manipulated’ showing profits to right up to the final curtain. This creative use of accounting is more or less the opposite of how the whole subject of accounting came into being.

Sometime before 3000 BC the people of Uruk and other sister-cities of Mesopotamia began to use pictographic tablets of clay to record economic transactions. The script for the tablets evolved from symbols and provides evidence of an ancient financial system that was growing to accommodate the needs of the Uruk economy. There is detailed evidence that almost every country had some form of record keeping, from China to ancient Rome, where the heads of families maintained daily entry of household receipts and payments in an adversaria or daybook, and monthly postings were made to a cashbook known as a codex accepti et expensi. Accounting is the process of recording and analysing transactions that involve events that can be assigned a monetary value. By definition, financial information can be only a partial picture of the performance of an enterprise. People, arguably a business’s most valuable asset, don’t appear anywhere in the accounts, except for football clubs and the like where people are the subject of a transaction.

Although accounting has become more complex, involving ever more regulations, and has moved from visible records written in books to key strokes in a software program, the purpose is the same:

• to establish what a business owns by way of assets;
• to establish what a business owes by way of liabilities;
• to establish the profitability, or otherwise, at certain time intervals, and how that profit was achieved.

Pacioli, about whom we will hear more in the bookkeeping section below, claimed wisely that ‘frequent accounting makes for long friendship’. But accounts must not only be timely, but should be reliable too, and no matter where accounting is studied you can be certain that the general principles will be universally applied.

An MBA is unlikely to be required to perform the recording side of the accounting process. But it is only by knowing how accounts are prepared and the rules governing the categorizing of assets and liabilities that you can gain a good understanding of what the figures really mean. For example, it is not obvious to the uninitiated that a company’s shares are classed as a liability and that there is not the remotest possibility that the assets as recorded will realize anything like the figures shown in the accounts.

The rules of the game

Accounting is certainly not an exact science. Even the most enthusiastic member of the profession would not make that claim. There is ...