Accountant

Welcome to the world of accounting! In this role, you’ll be handling the numbers and keeping finances in order.

What accountants do

Recordkeeping: Your first job is to keep a record of all the money-related stuff using things like invoices and receipts. Think of it like taking notes in a journal. This makes everything organized and easy to understand.

Summarizing: Then, you take all those notes and turn them into simple reports. Imagine making a summary of a big book. These reports show how the city or business is doing financially. Some important reports are bank balance, income, and expenses.

Financial Detective: Next, you become a bit of a detective. You look at those reports and figure out what’s going well and what’s not. This helps the business make smart decisions. You can also compare the business to others to see how they’re doing.

Explainer: Lastly, you explain all this financial stuff to people who need to know. This could be helping them understand how the business is doing, what might happen soon, or where to invest money. This helps everyone make smart choices based on the business’s money.

Keeping the books

In finance, we use something called double-entry bookkeeping. It’s a fancy way to keep track of money. Here’s the basic idea:

• There are five types of accounts: what is owned (assets), what is owed (liabilities), what the owner has invested into the business (owner’s equity), money from sales (revenue), and the cost of operations (expenses).
• There are two main actions: debits and credits. Debits are a positive change; they increase assets and expenses but decrease liabilities, owner’s equity, and revenue. Credits are the opposite.
• Accountants keep track of all the debits and credits in journals, making sure they are used correctly. Each journal entry needs at least one debit and one credit, as they should balance out.
• After that, the journal entries are entered into the general ledger, which is like a big book with all of the accounts and how much money is in them.
• We also use a trial balance to make sure everything is correct and balanced, like scratch paper used to show your work. This is important to keep our financial records tidy.

The goal of all this bookkeeping is to create financial statements that show how the business is doing financially. These statements help everyone make good decisions about how to run the organization.

The accounting cycle

The accounting cycle is how financial records are kept in order. It has a few steps:

1. Record Everything: Write down every financial transaction that happens. This is like keeping a journal.
2. Put it in the Ledger: After recording everything, records are put in the ledger, which is like a big book with all accounts and how much money is in them.
3. Check the Balance: Make sure everything adds up correctly by doing something called a trial balance. It’s like counting all your money to make sure it’s all there.
4. Adjustments: Sometimes, changes must be made to the records, like when there are bills to pay or money owed. Add these changes to the records.
5. Final Statements: After making all the changes, financial statements are created. These statements tell us what the business is doing with its money. They're like report cards for businesses.
6. Start Over: Reset everything for the next period. This makes sure our records are always up to date.

Financial statements

Financial statements are like a financial report card. They show how much money is owned, how much is owed, and if the business is making a profit. There are four main ones:

1. Balance Sheet: This is a snapshot of the business's money at a specific time. It tells us what is owned (assets), what is owed (liabilities), and what’s left for the owner (owner’s equity).
2. Income Statement: These are like financial journals for a specific time period, usually a few months or a year. They tell how much money was made and how much was spent. The difference is profit (or loss).
3. Statement of Owner’s Equity: This statement keeps track of changes in the owner’s investment in the business. It tells us if the owner’s investment is growing or shrinking.
4. Cash Flow Statement: This is like a money GPS. It tells us where the money is coming from and where it’s going. It helps us see if finances are being managed well.

Accrual & cash accounting

There are two ways to keep track of money:

Accrual Accounting: This method records money when it’s earned or spent, even if we haven’t received or paid it yet. It shows a more detailed picture of the business's finances.

Cash Accounting: This method only records money when it actually comes in or goes out. It’s simpler but may not show the full financial picture because it doesn’t consider money owed.

Management cccounting

This is all about helping the city make good financial decisions. Some important things to do:

• Budgeting: Make a plan for how the city will spend its money for the year.
• Variance Analysis: Compare what we planned to spend with what we actually spent to see if we need to make changes.
• Cost Allocation: Figure out how much it really costs to do different things in the city. This helps us make good decisions about what to do and how much to charge.
• Profitability Analysis: See which parts of the city make the most money. This helps us use our resources better.
• Costing Methods: Use different ways to figure out how much things cost. It depends on what we need the information for.
• Performance Evaluation: Check how well different parts of the city are doing and if they’re meeting our goals.

Financial Analysis

This is like looking at the city’s money health. We use special math (ratios) to see how well we’re doing. Here are some examples:

• Liquidity Ratios: These tell us if the city can pay its bills quickly. It’s like checking if we have enough cash on hand.
• Solvency Ratios: These show if the city can pay its long-term
• Profitability ratios look at a company’s ability to make profits compared to its sales, assets, or equity. These ratios help us see how well a company is doing financially and if it can make returns for shareholders.

<details> <summary> Current Ratio Equation </summary>

• X/Y
  • X = Current Assets
  • Y = Current Liabilities

This shows if a company can pay its short-term obligations without selling inventory. </details> <details> <summary> Acid-Test Ratio Equation </summary>

• (X-Y)/Z
  • X = Current Assets
  • Y = Inventory
  • Z = Current Liabilities

This shows if a company can pay its short-term obligations using its short-term assets. </details> <details> <summary> Debt-To-Equity Ratio Equation </summary>

• X/Y
  • X = Total Debt
  • Y = Total Equity

This shows how much debt and equity are used to finance a company’s assets. </details> <details> <summary> Debt Ratio Equation </summary>

• X/Y
  • X = Total Debt
  • Y = Total Assets

This shows what percentage of a company’s assets are financed by debt. </details> <details> <summary> Gross Profit Margin Equation </summary>

• (X/Y)*100
  • X = Gross Profit
  • Y = Net Sales

This shows the percentage of revenue left after taking out the cost of goods sold. </details> <details> <summary> Net Profit Margin Equation </summary>

• (X/Y)*100
  • X = Net Income
  • Y = Net Sales

This shows the percentage of revenue left as net income after taking out all expenses and costs. </details> <details> <summary> Return on Assets Equation </summary>

• X/Y
  • X = Net Income
  • Y = Total Assets

This shows how well a company makes profits from its assets. </details> <details> <summary> Return on Equity Equation </summary>

• X/Y
  • X = Net Income
  • Y = Total Equity

This shows the return a company makes for its shareholders. </details> <details> <summary> Inventory Turnover Ratio Equation </summary>

• X/Y
  • X = Cost of Goods Sold
  • Y = Average Inventory

This shows how fast a company sells its inventory during a certain time. </details> <details> <summary> Accounts Receivable Turnover Ratio Equation </summary>

• X/Y
  • X = Net Credit Sales
  • Y = Average Accounts Receivable

This shows how well a company’s credit and collection policies are working. </details> <details> <summary> Asset Turnover Ratio Equation </summary>

• X/Y
  • X = Net Sales
  • Y = Total Assets

This shows how well a company uses its assets to make sales. </details>

Conclusion

We hope that this friendly guide has provided you with the essential knowledge and confidence to tackle the in-game exam for the Accountant role. Remember, earning this role not only showcases your dedication to mastering the game’s financial aspects, but it also serves as an invitation for other players to consider you as a valuable addition to their company. Take your time, practice, and don’t forget to have fun as you embrace this unique opportunity.

We understand that the exam might seem daunting at first, but don’t worry! This guide is designed to support you every step of the way. As you prepare for the test, feel free to revisit any sections to refresh your memory or clarify any doubts. And remember, the community is always here to help and encourage one another.

So, gather your resources, refine your accounting skills, and set forth on this exciting journey to become a trusted and sought-after Accountant. With persistence and dedication, you’ll soon be an integral part of the thriving in-game economy. Best of luck, and may your ledger always be balanced!

Passed the exam? Now what?

It is recommended that you get the Entrepreneur guide and register a business or look for a company who is in need of one of the above accountant roles!