• PAGE ONE
• INDEX
• HOME

A `block' buster!

*Business Accounting and Financial Analysis

For Non-Finance Executives and Businessmen

By G. Francis Xavier

Publishers: Macmillan India Ltd.

Price: Price: Rs 148

CONFERENCE halls and convention centres are often rented by trainers who propound their ideas using slides and laptops, engage the captive audience in activities or games and collect their cheque at the end (if they had not been smart enough to do it at the beginning). Any damage is limited to the few scores who attend such programmes. But the problem gets out of hand when ideas that can pass off within the confines of carpeted rooms, among sleepy trainees, get entombed in a book for wider circulation. This book is an example.

The author, G. Francis Xavier, targets those who have ``a mental block thinking that the subject is very difficult to understand'', and goes about ``exploding'' such blocks by saying that the two words `debit' and `credit' -- that accounta nts would swear by -- ``do not convey any specific meaning'' but only ``create confusion in the minds of the people''. Do we need a guidance note from the ICAI on the meaning of the two words?

Well, if you have ever wondered why accountancy is considered a difficult subject, it is because ``people think that assets are good and liabilities, bad''.

``With this kind of mindset, when they come to know that profit is a liability and loss is an asset, people naturally get confused,'' the author explains and adds, ``To obviate this difficulty I have introduced two other terms -- paym ents and receipts -- to explain the concept of debit and credit.''

Here is a sampler of `block' busters:

* ``For every account a separate ledger is to be maintained'' (p.29). This could give good business for stationery shops.

* ``Action plus money is equal to transaction'' (p.35). Cut-cut!

* ``An expense is an expense and income is an income'' (p.44). Very true.

* ``Every asset creates its own liability; assets are substances and liabilities are their shadows. Substances and shadows cannot be separated'' (p.94). Has some substance.

* ``Every business concern generally starts with cash; and if it is liquidated, it also ends with cash'' (p.101). No credit for that.

* ``Ratios can be expressed in three forms -- percentage, proportion and times. The `times' mode is used when the numerator is generally more than five times the denominator'' (p.129). Read that two times.

* ``Excess of external liabilities over owners' funds does not indicate good financial health for the company'' (p.140). Wrong diagnosis.

* ``Working capital may be defined as `surplus funds''' (p.193). So, distribute it?

Each chapter ends with a ``play the creative game'' section ``for readers to play'', but despite the creative caption it is a bunch of true-or-false statements. There is at least one thing that could pain the Accounting Standards Board of the ICAI: There is no mention of its accounting standards in this book on business accounting.

P.P. Hebbar, Chairman of Aspa Group of Companies, has spiced his foreword with a few interesting statements: ``We as businesspersons do not go beyond the balance sheets. Unfortunately, to most, even their own balance sheet i s filled with ambiguity, and signatures are put at the end of the year (?) with little understanding. Discussion with the auditors inevitably ends in more confusion and misunderstanding (who is Aspa's auditor?). What makes matters wors e is the varying interpretations given by different auditors.''

Hebbar concludes his foreword thus: ``My final words: USE this book you are holding and may it bring you enlightenment in understanding and using the language of business and may it also bring prosperity to you and the people you work with. '' Quite thoughtful. He doesn't say, ``Read it.'' Nor do I.

D. Murali