Why Accounting Knowledge Is Needed

In 1923, a group of great leaders and wealthiest businessmen held a meeting at the Edgewater Beach Hotel in Chicago. Head of the largest steel company Charles Schwab, president of the world’s largest utility company Samuel Insull, president of the world’s largest gas distribution company Howard Hopson, chairman of the board of International Match Company Ivar Kreuger, president of the Bank of International Settlements Leon Fraizer, president of the New York Stock Exchange Richard Whitney, also two prominent stock market speculators Arthur Cotton and Jesse Livermore, and lastly Albert Fall who is a member of the President Harding cabinet were among the participants.

In twenty-five years, these nine participants somehow came to an end. Schwab died penniless after five years of debt. Insull passed away totally broke, somewhere far from his homeland. Hopson lost his mind and eventually went mad. Whitney and Albert Fall had just gotten out of prison. Fraizer and Livermore committed suicide.

Does anyone know what really happened to these guys? The conditions that prepared the Great Depression and the collapse of the markets must have disastrously affected the lives of these people. However nowadays, we are going through much greater and faster changes. Probably 20-25 years from now, we will see explosions and ruptures parallel to their ups and downs. The real wealth is education, not money. Unfortunately, many people focus on money instead. If these people were open to learning, their wealth would gradually increase as long as they were informed and open to innovations. It is always knowledge that produces money. Money flies away without financial knowledge.

What matters is not how much is earned, but how much money is kept. Most people fail to understand this. Sometimes we hear that a poor person suddenly becomes rich when he wins the lottery, but soon he returns to his poor days. He has millions of dollars, but after a while he returns where he started. Or let’s look at the life stories of professional athletes. Some make millions of dollars in a year by the age of twenty-four. However, when they reach their thirties, we read that they sleep under the bridges.

There is a story of a football player at social media these days. He was making millions of dollars until a few years ago. Now, his friends, wife, lawyer and accountant allegedly took all of his assets. He is living in the basement of an old friend’s house. He is only thirty-seven. He asked help from his old clubs, then his story was featured in media.

In the late 1990s, many people suddenly became rich. Just like the 1920s. People are getting richer, and as they get richer, their greed increases. On the other hand, the poor live more and more miserable.

We hear these questions often: “Where do we start?” or “How can I get rich in a short time?”. Instead of looking for answers to these questions, people should have financial knowledge or basic accounting knowledge to get rich.

If we’re going to build the Empire State Building, the first thing we need to do is dig a deep hole and lay a strong foundation. If we are going to build a house, a 15 cm thick foundation will be sufficient. While most people are on their way to getting rich, they try to build the Empire State Building with 15 cm thick concrete.

Our school system argues that there may still be house construction without foundations. That’s why the floors of the houses are still soil. Hence, when students graduate from school, they lack financial basis. Finally, living paycheck to paycheck, they decide that the only way to find a solution to their financial problems is to get rich as soon as possible.

Skyscraper construction begins. Construction progresses rapidly. Soon a curved tower appears, not the Empire State Building. Sleepless nights come back then.

Accounting is perhaps the world’s most boring subject. It can also be called very confusing. However, if we want to get rich and keep it for a long time, the most important issue is accounting. The point is how to learn this boring and confusing topic. The answer is that; with simplifying.

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