Welcome everyone to the accounting course. This course is kind of special in our specialization. And the main difference from other courses, from capital markets, from corporate finance, and from a future course in it serves, at a first glance, a special support role. And that might be an offense with respect to this course, but that's only at the first glance. The thing is that accounting in general is a huge area. People who study accounting, they deal with a thousands and millions of pages of information. They have to memorize a lot, they are really bogged down in the procedures, standards, and everything else. Now, this is strictly speaking, not a course in accounting. This is the course in what should be known and understood about accounting. For the most efficient, not only career, but also actions in validation in the analysis of investment projects, and in finance in general. The reason why I make this distinction, and that I somewhat especially and openly put these things as opposite ones is as follows. There are quite a few people who are proficient in accounting, but oftentimes the result is that they know a lot of procedures, standards, ways to do this, but unfortunately they really do not see the big picture. This is a specific of the situation, and that is what we have to fundamentally avoid. We cannot afford to be really buried under these special rules and procedures on something. And that is why we structure this course in that way. So, the first thing here is, this is sort of the intro to accounting. We start from here. And the first question, after having said all that, is why study accounting? Maybe this is something that has to be put somewhere else. And instead, this part of the specialization could have been filled with something else. Well, I put this quote of the accounting course here for the good purpose. The thing is that we, in our valuation, or if you will, finance purposes, we deal with information, as you remember, and financial information is almost always presented On the basis of accounting. Accounting principles, if you will. So we could wish that we would have the information in a different format. But the reality is different. Well, the next thing is that we have to say that these principles, if we put an arrow like that, they allow to see some key value drivers on the basis of the information that at the first glance masks that. And finally, and this is maybe the most important thing why we study accounting, is that, as we'll see, as early as the next page of your flip chart, accounting deals with stakeholders. Well, we talked about stakeholders in the special edition many times, and we will talk about that even more in our course. But for now, these are the people who's vested interests are in the area and the people who make decisions. So when we see some decision makers, and as often happens, also decision takers, we can see that this is something that is linked to what we've been taking about. So all that is sort of a very introductory thing. And as of now, we can say that basically, accounting, to a significant extent, is a language that is widely used by the people in business, and in finance specifically. Well, you can say, we're here in an advanced specialization, so we would love to speak this language fluently. Well, that's right, but real fluency here does not mean details in accounting. Real flluency means the understanding of core issues and the ability to use some accounting approaches to correctly extract and use the information to come up with a valuation. And if, to put it in a sharp form, to use that in our NPV calculations. So this idea of a language is important here. And whenever we see a language we have to go backwards to ancient times, as it's said in the Bible, for example, in the Holy Bible, that there was a case of the Tower of Babel, when God made it the way that people stopped understanding each other. So our job is to make sure that we can avoid falling into this Tower of Babel effect to the best extent we can. And that is how this part of the specialization, this course is structured, and that is why how we proceed. Let me say a few other words about this introduction. Well, if we take the special approach then we see some challenges To study accounting. Well, first of all, if you ask people at large what they think about studying accounting, most of them people say, well, this is boring. This is overloaded With procedures And standards. So this is the need to memorize a lot. But that is not only it, some people say this is kind of, I put it quoted, artificial. So, people say well, you talked about this language. The language that, in theory, must lead to understanding. And instead, most of the procedures and standards of accounting seem to be kind of artificial. They describe the economic entity in special way. And this way is not always the best at a first glance. So this is kind of a challenge. And basically, this is for us, this makes for us a big problem, because not only that, this is sort of like what, boring, you have to memorize a lot. Well, work more and you'll be able to overcome that. But the key story is that, like I said before, oftentimes people treat accounting as a set of these procedures. This is a classic trap in which you can fall by failing to see the big picture. And that is detrimental to the efficiency of proper evaluation with investment projects. So this kind of a challenge to us. So we have to deal with that. And what we will do, we will say, fine, these are all challenges. We will, we will try To reveal The core meaning. So like I said, we will not be focusing on some specific procedures that can be looked at at special manuals or handbooks, and also whatever. But we will say, why is that so? Why is that important? And why is that we study them? And then, finally, just as a few words about the important break down or distinction between two parts of accounting. Namely financial accounting, versus managerial accounting. In this week, we will cover both. The first three weeks will be devoted primarily to financial accounting, while the last three to managerial accounting. And again, like I said, both this area and this area separately deserves not all the specialization, but maybe a set of specialization. So this is a huge area. But for us, for now, for the first time, we have to point out that this deals primarily, I'll put a quote in it, with external stakeholders, while this is more to the internal stakeholders. Well, who are these external stakeholders? Investors, creditors, customers, suppliers, and others, while these people are primarily the management and other decision makers. So it seems like, for us, if we like to value the project, that seems to be the more important part. Now, I am not saying which part is more important and why. I am just trying to make a distinction from now, and we will be covering that in greater detail in our next weeks, but for now that must be kept in mind. So all that, having said, with all having been said, with all these reservations, and sometimes doubts, misgivings if you will, that leads us to the big question. And the question is, what is accounting? And starting from the next episode, we will start answering this question.
