The Tyranny of Double-entry Bookkeeping

[The Whiskey Priest]

My favorite rant: Viewing a human, simply because they work for hourly wages, as an expense the same as a widget, a piece of coal or dust mop; dehumanizing, demeaning and the rational for keeping wages low.

[displacedtexan]

1. I taught in a district where staff and faculty were paid out of...

the maintenance budget. Light bulbs, toilet paper, teachers, Lysol, secretaries, paper towels, etc.

[lectrobyte]

2. and in corporate-speak, the staff is called "assets", "resources", or

my personal favorite, "headcount".

[Selatius]

3. They are an expense if you look at it this way:

You control a resource people need, but you can't exploit a resource all by yourself. You need to get something to help you exploit the resource in order to make a profit by selling it to the people who need it. Therefore, you expense workers the same as you expense equipment. You have to spend money out of your own pocket to do that, so they are considered a liability, not an asset. The difference is that you can own equipment, land, factories, etc., not people.

If assets equal liabilities (what you owe) plus equity (what you own), then workers would be considered a liability.

[papau]

4. Workers equal an "asset" as Drucker always taught. Indeed the

value of an information company in an information age is 99% its workers. Its lease on office space is not what is going to make it money.

[Selatius]

5. This is not what I was taught in business school

Whenever you book worker pay, you put it under liabilities, and not equity. Workers cannot show up under your equity account because you cannot legally own a human being.

[The Whiskey Priest]

6. That is what they teach.......

which makes it correct,but,is it Right?

[Selatius]

7. No, of course not

I always preferred a society built on mutual cooperation and the sharing of resources as opposed to competition to gain control over those resources for one's own personal gain, but if you take any accounting class, you'd see that you don't place worker pay under "assets." You are told to place them under your "liabilities account" because you owe your workers, and since you cannot legally own people anymore, you cannot place workers under your equity account either. It is an expense, and people in the business world are taught to keep their expenses in check.

[papau]

8. Actually that was what you were taught - "Good Will" asset is real, and

companies are purchased for higher values than book meaning there is a "present value of future sales/earnings" that is being paid for - meaning the value of current employees.

Indeed when I bought and sold companies the real discussion was about what the value of those employees really was - and would they stay.