Even within the same set of standards, there may be more than one acceptable way to “treat” (record and organize) a piece of financial information. Let’s work through a couple of examples.

You work for a marketing firm as a graphic designer. You make a $15 payment to a website that offers officially licensed sports graphics for 10 cents each. The company receives your money in one lump sum, but it will provide its service to you over a period of time (however long it takes you to download 150 graphics). The expenses involved in providing the service to you cost the company around $3. So, that’s $15 coming in and $3 going out. However, the $3 doesn’t go out at the exact same time the $15 comes in. The company can spend your money immediately if it wants to, but it must determine how to keep track of the expenses involved in providing the service to you so that they don’t become lost or hidden. There may be more than one acceptable accounting method for tracking these expenses, but the important thing is to do it the same way every time.

You have a summer job babysitting your neighbors’ two children. At the beginning of each week, your neighbor gives you $100 in cash for the kids’ weekly expenses (pool, ice cream, etc.). It is your job to keep track of what you do with that $100. You might keep a little notebook where you jot down each expense. Or, you might put $20 in five different envelopes marked for each day of the week. However you treat the financial information, you should be consistent and careful so you don’t lose track.

Make sense? Can you think of different ways you might “treat” a piece of your personal financial information?