The Leadership Account - Part 1

The first C that I made in school came during my first semester in the MBA program at The University of Texas at Arlington.

I made a false assumption that because I was pretty good in math, I would do well in accounting. Bad assumption! I could not figure out why when you increased some accounts you debited them, while increasing other accounts you credited them. Why couldn’t they be consistent???

When the report card for that semester came, I was pretty sure the sun wouldn’t come up the next day. I was devastated.

A few years later, I was teaching economics at Tarrant County Junior College - One class, two nights a week, at the way-out-there Northwest Campus. So, I asked if there was another class that I could teach on those nights to make the drive more worthwhile. They said, “Well we have a Principles of Accounting class. Would you like to teach that?” I immediately responded, “Sure. I can do that!”

Well … You don’t really learn something until you to teach it to someone else.

Fortunately for me, the text had a chart on the rules of normal balance for all of the different types of accounts. It also showed what to do – debit or credit – if you were increasing or decreasing that account. Finally, the logic of accounting began to make sense to me!

I don’t know how many times I repeated these phrases that semester:

"What kind of account is it?" Class Response in Unison: "It’s an asset."

"What are we trying to do?" Class Response in Unison: "Increase it."

"So what do we need to do?" Class Response in Unison: "Debit the account!"


Now when you read “Class Response in Unison” you need to think about the scene from Leave it to Beaver:

Ms. Landers: “Good Morning Class”
Class Response in Unison: “Good Morning Ms. Landers!”

Now that y’all are up to speed on accounting, I would like to apply your understanding to leadership. If we were accounting for Leadership, how would we “book it”?

Well, “What kind of account is Leadership?”
In unison now: “It’s an Asset Account.”

Very good. As leaders there are several things we need to add to our account. Those will be debit entries. And there are several things that need to be subtracted. Those will be credits. And because leadership is an asset account, the normal balance for the Leadership Account is a debit.

In my next few posts I will be discussing the Leadership Account. So, go ahead and create a T-Account labeled Leadership.

We will walk our way through some important journal entries that all of us as leaders need to make.

Before we do, let me ask:

What is the balance in your Leadership Account?