You may be thinking “books?� “What books?.. You mean the book I’m reading right now?� NO! We’re talking about the accounting books called “ledgers�. Most businesses have several ledgers for different purposes, but in general, they have at least two: the General Ledger which summarises all the accounting information for the year and the Daily Cash Ledger which records all daily operations or transactions.

Some businesses that have questionable transactions like to “cook the books� instead of closing them! I can remember a person who loved to cook the books. He was very famous or notorious I should say… but he was good at it! Until one day they sent him to prison for a very, very long time. His name: Al Capone, from my hometown Chicago.

But if you and your company are like the majority of us, we balance and consolidate our accounts at the end of the year, only to open them all up again the following day! It’s mad, isn’t it?

End-of-year reporting is the worst. Most annual reports coincide with “quarterly� or fourth quarter reports which make our work especially tedious and complex. There really is no magic potion to reporting earnings or annual reporting.

Hopefully your company has enough money in their P/L account (that’s profit and loss account for us amateurs out there), so they can continue operations for the following year. If your company reported losses, we would say “they’re in the red�… That’s because a lot of red ink is used to report losses in many countries. But if you form part of a successful multinational telecommunications company (hint, hint) then you are definitely “in the black�… and that’s good news for you and your shareholders!!

There are a lot of companies however, that also need to report an “extraordinary loss�. These are normally “losses� which occur due to an unforeseen or out-of-the-ordinary event such as a merger or an “unrecorded� loss resulting from a previous year, restructuring, amortisation, or even a change in accounting procedures.

A lot of companies also have to declare the amount of VAT or Value Added Tax they are returning to the administration or the amount of deductions as well. Deductions will always influence the P/L account in a positive way, while VAT returns will obviously have a negative or neutral effect, depending on how good your accountants are.

When all is said and done, the money in the P/L account can either be distributed as a cash dividend, a stock dividend or reinvested in the company to finance operations.

All corporations have to decide the upcoming annual budget. While budgeting is rather complex, the principal idea is to distribute or allocate a company’s resources in the most effective or optimal way. Budget issues are crucial to a company’s survival since they directly affect what the experts call “asset liquidity�, which is the ability to convert equity into liquid assets to pay off any debts. Normally a company will have to be very careful about how much money they “freeze up� in projects, and how much they spend during the year.

Forecasting is a major, if not the most important part of budgeting. Forecasters predict or estimate where capital originates and how it is applied. Any budget is actually an estimation of all of the revenue generated and expenses paid throughout the year. What it does, is that it gives managers, and project or team leaders an idea of how much they have to spend, invest or even make during the year. At the end of the year, they will close all the accounts and determine whether or not the budget was “balanced� this year, or whether it was “running a deficit� or surplus, if there is any money left over.

Budgeting and handling annual reports though is a very daunting task so it’s good to keep your humour up. That reminds me of a joke I heard the other day about accountants. It goes like this:

A very successful accountant parked his brand-new Lexus in front of his office, ready to show it off to his colleagues. As he got out, a truck passed too close and completely tore off the door on the driver’s side. The accountant immediately grabbed his cell phone, dialed 911, and within minutes a policeman pulled up.

Before the officer had a chance to ask any questions, the accountant started screaming hysterically. His Lexus, which he had just picked up the day before, was now completely ruined and would never be the same, no matter what the body shop did to it.

When the accountant finally wound down from his ranting and raving, the officer shook his head in disgust and disbelief. “I can’t believe how materialistic you accountants are,” he said. “You are so focused on your possessions that you don’t notice anything else.”

“How can you say such a thing?” asked the accountant.

The cop replied, “Don’t you know that your left arm is missing from the elbow down? It must have been torn off when the truck hit you.”

“My God!” screamed the accountant. “Where’s my Rolex?”

Annual reporting can be stressful, but remember to laugh out loud (LOL) from time to time…it’s good for your body and it’s good for your soul.