ABSTRACT
Accounting is all about measuring money. It’s important to know enough about accounting to understand what the Accountant is telling you, because it will influence the business decisions that you make as a Project Manager, contract manager or Managing Director. Accountants talk about ‘liquidity’ and ‘liquid assets’ so I want to continue the fluids analogy for a bit, because it’s an easy one for engineers to understand. Think of the company as a balancing tank for water. Water flows into the tank rather like cash flows into the company – not necessarily at a constant rate (though that would be nice!) nor even continuously. The water flowing out of the tank is also usually intermittent but can beChapter 9 controlled to some extent. The things we can measure are: the volume of the tank contents, the instantaneous flow rates both in and out and the cumulative flows over a period. Hang on to that picture.
