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Although accounting might not be glamorous or exciting, knowing the basics is a key to financial success for any business; a golf course is no exception, says David Smallwood, superintendent at Kapalua Resort in Lahaina, Hawaii.

"I was somewhat familiar with basic accounting and bookkeeping principles prior to attending Syngenta Business Institute," says Smallwood. "I had a pretty good grasp on some of the basics, such as balance sheets, but SBI helped me to understand additional accounting practices such as depreciation and how that is figured into your financials."

Smallwood learned that depreciation is calculated by taking the cost of the piece of equipment divided by how many years of useful life the equipment is likely to have. "For example, if we buy a $25,000 mower with a useful life of five years, that asset depreciates by $5,000 annually due to wear and tear," Smallwood explains. "Instead of including the total expense of the asset on the income statement when it's purchased, you spread that cost over the asset's life through depreciation."

Superintendents should learn the basics of accounting for a number of reasons, Smallwood says. "Being able to read a monthly 'statement of financial position' and see how your facility is matching up to its budgeted goals is an important part of sound management," he says. "You need to know if expenses are exceeding revenue and why."

Another concept Smallwood found important was a comparative analysis to competition and industry. "Comparative analysis is a comparison of two or more similar processes, products, or the like," he explains. "If there are changes in your facility's financial statement over several accounting periods, you may be able to use this to detect emerging trends in the operation. This can be used as another way to see what’s working and what isn’t financially."

Reading a financial statement is another skill that every manager should have. "Looking at what the facility owns (assets), what the facility owes (liabilities), and the owners’ residual rights (owners’ equity) gives a good snapshot of where the facility is financially," Smallwood says. "This was important to me for comparing our year-over-year trends and how we are stacking up against clubs similar to ours."

Smallwood also appreciated the information on capital expenditures. "Evaluating leasing vs. purchasing was an eye-opener, taking into account things such as tax considerations, rates, and depreciation schedules," he says. "The final decision to lease or own all really comes down to the owners. If for tax purposes it makes more sense for them to lease versus own, then that is the best option at the time."

Communication skills are the hallmark of all successful managers, and learning accounting basics make it easier for Smallwood to communicate with other administrative departments. "I feel like I am more educated on accounting topics, and able to have more productive discussions with our accounting department."

Make no mistake, accounting is still a complicated topic. But Smallwood feels his greater grasp of the basics has paid off. "There are still plenty of topics that I am not completely clear on," he admits. "But overall, I feel like this portion of the SBI conference helped me to gain a better understanding of accounting principles in general."