Accounting Sucks

I tried typing up my entire textbook with the general question "WHAT THE @!(#!(#@? DOES THE BELOW MEAN", but decided that might take too long...

Jokes aside, thats the frustration -- I don't fully understand it, but its not like I can boil my confusion down to one question... Right now I'm reading up on statements of cash flows, so if you have any resources for that, feel free to let me know.

Conceptually, I understand the purpose of a statement of cash flows -- the balance sheet and income statement dont really tell me enough about whats going on - got it, clear as a whistle, but.... I don't necessarily understand how or why some things happen.

For instance, if I told you that company A had accounts payable of $10,000 in 2004 and $30,000 at the end of 2005, you'd say to me, "Golly gee rhyme, they musta purchased some stuff for $20,000". I'd say "Darn tootin, they sure did." Then youd say "Now whats ya think happened to their cash as a result?" and I'd say "Well, they bought on account, so hells, I don't think anything happened to their cash." and youd say "!@# your stupid. Make a t-account" and then I'd rip out your eyeballs and stuff them down your throat. Err, I mean, I'd say "Okie dokie, that sounds great." and I'd make some god awful painful t-account called CASH. Underneath that I'd write some crap like Operations, Investments and Financing. You'd ask me to categorize this particular issue and I'd say "Well, golly, its operations."

Now, you'd then tell me that since I've already figured out they bought $20,000 worth of crap I should make another T-account called Accounts Payable. I'd hunt down your family and burn down your house, but before I do that I make the T-account and I credit Accounts Payable (L) by $20K to reflect the change from 10 to 30. I then say, "sure, this is fun you sadistic !@(#". So I'd do that, and then I'd mindlessly debit cash for $20,000 so that the retarded equation balances. You'd clap your hands and we'd all be happy as !@(#@!(# pie. I'd be on my way to making a statement of cash flows and solving world hunger.

But then, I'd actually try to THINK about the problem, and all of a sudden, it all goes to !@(#. See, thinking and accounting are like me and that Justine Pergola girl in high school. Some things just weren't meant to be.

I'd turn to you and say "Wait a @!(# minute. What the !@#? Let me get this right... I increased my accounts payable by $20,000 - meaning, I owe some dumb!@# who actually had the stupidity to sell me something on credit $20k -- and I'm going to do what with that? Debit cash? This isn't cash. Its not even a !@(#1 bank note. It's inventory. @!(#! inventory. How the hell is my buying $20,000 worth of something make my CASH go up by $20K. No cash has been transacted at all. Heck, if anything, I should reduce my cash position by $20K cause I owe that much now."

You'd look at me, laugh shake your head and reply:

"Dear Sir, do not think of it this way, rather think of it as................"