From the course: Accounting for Managers
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Understanding exception analysis
From the course: Accounting for Managers
Understanding exception analysis
- Throughout my career, I've seen several managers dragged over the coals for getting numbers wrong. But what does it actually mean to get a number wrong? Okay, if a spreadsheet is riddled with formula errors then sure, that's getting numbers wrong. But more often than not, the reason that numbers change is because they're a best guess at a point in time, and as time changes, so too does the variables. To help explain this concept a little further, how about we use a weather example? Lets say today is May 2nd and in 10 days from now, that is May 12th, LA has a forecast high of 72 or 22 degree Celsius. As May 12th draws nearer, this forecast will almost certainly change each day. Let's fast forward to May 12th and say that the actual temperature ends up being 74, or 23 degrees Celsius. This doesn't mean that the original forecast on May 2nd was wrong. It was accurate at that point in time based on all the data available.…
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