Thursday, February 7, 2013

The Accounting Profession -- A Lie By Any Other Name

We spent a delightful day yesterday in the town of Tigre, with our travel agent Silvia. 



She used to be an accountant but could not take the pressure.  In a country with high inflation, no company can make a profit buying and selling goods with regulated prices.  By the time the goods are manufactured, the sales price is always less (in real terms, taking inflation into account) than the cost of making the goods.  So, manufacturers sell their goods on the black market, where prices are, of course, higher.  But their books can't reveal the actual prices for which they sold their goods, because that would be illegal.  So, the accountants challenge is to make up some sales prices (and maybe costs of manufacturing) that look like legal prices and still make it look like the deals produced a profit.  Don't get it?  That's because it is nonsensical.  So, Silvia decided she couldn't handle all of that creativity and decided to become a travel agent.  Good idea.

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