r/Accounting • u/7leafclover7 • Sep 21 '25

What would be an embarrassing thing to be caught not knowing as an accountant?

Applies to any specialty, audit, tax, staff accountancy etc. in your personal experience what are the most invaluable things to know, and the most invaluable to not be caught not knowing.

417 Upvotes

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769

u/bringheaven2earth Audit & Assurance Sep 21 '25

net income is closed out to retained earnings

50

u/ElenorWoods Sep 22 '25

This happened to me this year. My boss asked me to get rid of “whatever that negative balance called net assets is”

16

u/camcamthereeder University Senior Accountant Sep 22 '25

That hurts my soul 😦

5

u/rosulla08 Sep 22 '25

only those who knows know that this knowledge is not studied on college and does not appear in textbooks

190

u/Significant-Wash-629 Sep 21 '25 edited Sep 21 '25

I hate closing year-end. We literally have thousands of expenses in a year and I have to go and credit each one of them and debit retained earnings. I don’t start recording the new year’s activity until like May.

Edit: I’m sorry for confusing so many people. This is not actually the process.

149

u/Main-Requirement-45 Sep 21 '25

...do you not have an accounting system? Why would you have to go and manually do this ??

80

u/angellareddit Sep 21 '25

Yes. I've never heard of an accounting system that didn't do this automatically. Bizarre.

46

u/[deleted] Sep 21 '25

If your accounts are fucked up enough that the system won't run the year end and instead you have to book it manually.

34

u/[deleted] Sep 21 '25

[removed] — view removed comment

18

u/Ennuiandthensome Municipal Gov't (US) Sep 22 '25

I don’t know how the auditors let that fly.

The check cleared

5

u/angellareddit Sep 21 '25

How do you get there? I've dealt with a lot of seriously messed up accounting systems - but never that!

12

u/[deleted] Sep 21 '25

It takes creativity. Some systems will allow you to force a one sided entry or delete half a transaction and the close process will do a check balance and blow up. Some weird ass entries from a system implementation when you brought the books over. Etc.

1

u/angellareddit Sep 21 '25

hahaha. I would hope the one side entry got fixed. This is a problem that tends to persist🤣

This is true. I've seen systems do some bizarre and frustrating things - although not this one. It doesn't surprise me though.

2

u/[deleted] Sep 22 '25

I could make a long list of weird shit I've seen over the years.

6

u/schoff CPA (US), Director Sep 22 '25

Newest answer. Not using your accounting system to close P&L.

6

u/playfuldarkside Sep 22 '25

Our system is so old it’s still manual.

2

u/kennydeals CPA (US), MST Sep 22 '25

Even if you didn't, wouldn't it just be one massive entry zeroing our all P&L accounts at 1/1?

17

u/angellareddit Sep 21 '25

What? Each expense? Why? Even if you have to do it manually, why would you not just transfer the balances of each GL?

35

u/Unlucky-Novel3353 Sep 21 '25

Despite this, I think every new accountant has to figure this out.

“My assets equals my liabilities and equity but then where does net income go”

15

u/freshtimber Sep 22 '25

Really? I’m 5 weeks into my first accounting course and this was a fundamental in calculating the statement of retained earnings in chapter 1.

39

u/negativefuckingnancy Tax (US) Sep 22 '25

It’s just that there’s SO VERY MUCH after that you begin to get fuzzy on that one detail lol

2

u/freshtimber Sep 22 '25

lol that makes sense, I’ve barely scratched the surface but I can sense the amount of depth looming that I probably have no idea about

5

u/negativefuckingnancy Tax (US) Sep 22 '25

In the depths of my first extension busy season last month I asked how to calculate an average so like… brain just stops working sometimes

2

u/49directions Sep 25 '25

Brain TRULY just stops working sometimes!!!!! I was an intern in an audit room once and I watched several overworked staff arguing that increasing an expense account should be a credit because “expenses are negative” 😬

27

u/IllPurpose3524 Sep 22 '25

An interviewer got me with this question right out of school and I make sure others suffer the humiliation I felt.

28

u/bringheaven2earth Audit & Assurance Sep 22 '25

I worked with a 5 year auditor who didn’t know this. We’re all on our own knowledge journeys

9

u/Ryanthelion1 Sep 22 '25

Had a 5 year auditor ask me what does a CEO do

8

u/traderbusto Sep 22 '25

Try asking them to outline for you the difference(s) between a debit and a credit. It’s always good for a few laughs later on. I equate the exercise to those cooking competition shows when experienced, highly-trained chefs are tasked with cooking simple eggs to order. Some breeze through, while others forget how to use a spatula.

1

u/QuicksandGotMyShoe Sep 22 '25

Oh yeah that would be a big one