Financial planning to learn accounting

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Banana Accounting is a tool that has proven extremely valuable for improving the teaching of accounting. The software has been continuously enhanced to make training ever more easy and make it available to all students. is a pioneering company in this area and is already imagining the next steps for teaching accounting. New tools open new perspectives, hitherto unthinkable, which let us assume that we are moving towards a more comprehensive commercial training, where the learning of accounting is combined with the training of new managers and entrepreneurs.

This perspective is in line with the changes of the coming decades, where more pronounced automation in the area of account keeping is expected and attention will be directed towards understanding, analyzing and financial planning skills.

In companies all over the world accounting is kept with the computer. In the training context however, students still practice by hand instead, due to technological limitations. Students, when entering the labour market, are not sufficiently prepared to use modern technologies. Thanks to Banana Accounting, the use of accounting software has started to be integrated into training in many schools around the world. The results are remarkable for both students and teachers. In the coming years, thanks to technological progress, this exception will become the rule. In all commercial schools of the world you accounting can be taught at the same time as practicing keeping accounts with software suitable for this purpose. Upon entering the labour market, students will already be prepared to use the computer. Learning the specific management software used in the company will be much faster.

From abstract accounting training to a more practical one

Accounting, like mathematics, is considered to be a difficult subject. The problem lies in the fact, that the exercises are abstract, without a reference to the reality and experience of people. This situation is particularly evident when solving a mathematical problem. The result is generally a number that has no connection with anything concrete. The result itself does not matter, for practical purposes it does not matter if the calculation of the percentage delivers 9, 10 or 11 as a result; what matters will be, that the result matches the one indicated  as correct by the teacher.

The same happens in teaching of accounting. When the student is given the task of entering transaction, what counts is that the solution is exactly the one expected.

The situation is different in practice. The wrong calculation of a mathematical operation could make us lose money or create the impression that we are cheating on the other party. It is something real and which has a financial impact. The same goes for accounting, when practicing profit and loss is based on abstract notions. To make exercises more interesting, the accounting teachers try to set up exercises that are inspired by real and concrete cases. They remain however historical data, of a fictitious company, with which we have no connection.

It is much more stimulating to keep the accounts of a real company. The aim is not only to keep accounts correctly, but to see if the efforts made in by the company to improve sales or reduce costs have been successful. In the teaching of accounting we must proceed step by step. First we create simple examples and then we move on to more complex operations. In real life, events don't happen according to a predefined scheme, so real data is not the ideal support for teaching accounting. To make the practice of keeping accounts more interesting, virtual companies are put in place. Students work for fictitious companies, which sell and buy goods among themselves, pay wages and do all the operations that a real company generally does.

The financial planning of Banana Accounting

Banana Accounting provides an innovative and indeed, unique system of financial planning that uses the double entry method. You can generate detailed forecasts of the company, complete with budget and forecast of economic accounts, liquidity, investment and financing plans.

To insert accounting records, the same file and Chart of Accounts are then used to prepare financial plans.

  • In addition to the Accounts and Transactions tables, there is the Budget table In the file, identical in set up to the Transactions table. The Budget table is used to prepare the accounting of the future. The forecasted movements are inserted, using the double-entry methodology.
  • To indicate when the equity will be paid in, the expected future date is indicated, the amount and the debit and credit account.
  • All the operations foreseen in the future are inserted as estimates. There are additional features that facilitate the preparation of planning.
  • Rents and other recurring transactions can be indicated with a single registration; the frequency of the repetition is indicated and the program, when calculating the estimate, will automatically generate the lines for all the future rent payments.
  • You can also enter calculation formulas, as in the case of amortization or interest calculations, so that the results are obtained automatically, based on the balance and movement of the account. You will save time, because when a value that affects the calculation is changed, the values are automatically recalculated.

The financial planning is then completely set up with double-entry accounting records. The program will calculate the estimated values for the indicated period. When printing the Balance Sheet and the Income Statement, you can choose to include the Budget column.

This financial planning system is familiar to those who know accounting well, but it can also be used to learn double-entry accounting.

Business plan and financial planning

Commercial training increasingly tends to provide the knowledge necessary to better manage a business by placing the emphasis on management aspects. Often teaching on how to prepare a business plan and the section of financial plans is provided.

With the double-entry method, preparing financial plans is made much easier and more efficient. As everything is already set up, you don't waste time creating tables, inserting and checking formulas with Excel. Starting from the existing data, the liquidity plan, the income statement and the forecast budget are available instantly. Developing the planning, evaluating different scenarios, adding, deleting, changing elements is much more simple, because we start from the details, we may use the recurring operations and we can make temporary combinations. In an instant, you will have the projections and you can choose a specific period and select the best displaying mode.

With Banana Accounting you can generate complete and detailed financial plans, even if you are not an Excel specialist. The teacher and students will not waste time setting up the sheets and formulas and can instead concentrate on the business part. Training becomes much more effective and practical.

More active and stimulating accounting training foresees a future where students are trained simultaneously in both accounting and financial planning training.

With Banana Accounting, financial planning is prepared by inserting double-entry accounting records. The approach is identical as for accounting, but instead of preparing past data, we focus on the future.

It is possible to imagine training on the double-entry method, which takes place in the context of setting up a plan for the creation of a company. Each student is given the task of simulating the setting up of a startup from a financial point of view. Using the planning features, we can explain what a Chart of Accounts is and how to enter double-entry transactions and practice with them. The student will not just be a passive person; not only must he enter records by referring to fictitious values ​​based on past values and a company he does not know, but he must also insert realistic values, referring to his own company.

Not only will it be important to enter the records correctly, but even more so, to ensure that your company will be successful. Looking to the future, the student is automatically stimulated to verify the repercussions of the operations on the liquidity, income statement and balance sheet of his / her company. As in the reality of accounting, registering correctly is not the goal, but it is the tool to understand if your company will be successful and financially viable and will earn enough.

Accounting will no longer just be an abstract activity, but will become something real, the means that will allow the person to start their own business. The teacher will guide students through all the various administrative situations, in order to provide a complete training covering all accounting cases. However, his role will tend to change, as he will become a figure functioning as a coach and educational guide in assisting to understand connections and finding solutions.

Training can become more attractive and stimulating through this approach, because students will not be handed the figures to be transformed into registrations, but they will have to imagine what the amounts represent. They will have to connect to reality, to find out how much it can cost to rent the premises, the subscription to the phone, the purchase of a machine. The figures will have a meaning and the students will be stimulated to continuously check the impact that these will have on the budget and on the income statement.

Planning based on the double-entry method allows the logic of the game to be adopted in teaching accounting, which are very stimulating and to which students are already accustomed.

This ongoing activity of interaction and exploration will lead to a more comprehensive training. The teacher will not have to insist that students try to understand the accounts, as this will become the primary objective in itself. This should facilitate the learning of the concepts and consequently to better understand the accounting records. In fact, the more students are able to understand what the consequences of a registration are, the greater their ability to perform them correctly.

It is well known that the more experience you accumulate in entering transactions, the more you become familiar with accounting. Developing a financial planning takes a long time, for every hypothesis you try out, you will have to make a registration. The continuous simulation exercise and the change of movements allow you to reach levels of knowledge similar to the continuous performance of different exercises. If this were to become the case, the teacher's activity will become much more interesting and simpler at the same time, without handing out infinite lists of tasks that would then have to be corrected.

If the students immediately learn to understand the Balance Sheet and the Income Statement, it is probably possible to introduce them also to the analysis of the Balance Sheet and to get to know the main indices at the same time.

Plan-Execute-Control methodology

Starting with planning allows you to direct students to the use of the well proven Plan-Execute-Control methodology. Students can easily understand, that running a business is a dynamic activity, which requires constant adjustments.

A near future

For the time being, these are only hypotheses of how accounting training could evolve. However, they are based on logical reasoning that seems self evident, if we consider that we have innovative and futuristic financial planning tools available. With current tools, accounting that is done by hand or with the teaching of financial planning made on the basis of Excel, certain scenarios are of course not even conceivable.
However, since the tools change, and sophisticated simulation tools, based on the double-entry accounting method are being used in training, certain hypotheses become more probable.

This is what has happened in many fields. CAD / CAM has opened up new perspectives in the field of engineering training and construction in general. Students are no longer limited by what they manage to draw by hand, but they have sophisticated systems that allow them to model objects in 3D and make them move in space. They can go much further, imagine and get used to solving more complex situations. Thanks to Banana Accounting, it is probable that the same prospects will also open up in the field of accounting training.


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