- Remember when we used to work as bookkeepers
at Wasatch Medical Center?
Back in the day when we were accounting students at BYU?
- Those were the days.
That was some real hands on experience.
Keeping the books for a partnership of three busy doctors.
- I started there first and you came along
a couple years later after I graduated from BYU.
Now by the time you got there I had the entire bookkeeping
operation working like a well oiled machine.
- Hey, we can conduct an entire course about the messes
that you made that I had to clean up.
But today, let's focus on the transition
from paper based records to computer based records
at Wasatch Medical Center.
- Okay, good, now when I started working for the doctors,
their books actually were two big physical books.
- [Man] Two, why two?
- [Man] Okay, well one book contained a chronological list
of business events, cash collections from customers
and insurance companies, payments to suppliers,
payroll, payments for utilities and so forth.
All these events were coded using the awesome accounting
debit-and-credit language.
- Well, what was in the other big book?
- Okay, well the other big book was called the ledger.
This book contained a page or in some cases several pages
summarizing all of the business events affecting
each important financial item in the business.
- Yeah, a ledger.
So there was a page containing a listing of all
the cash collections and payments,
and a page listing all the purchases from
and payments to suppliers.
- Exactly, now I created this ledger by laboriously
going through each of the events recorded
in the chronological journal, sorting them,
and then copying them into the correct pages in the ledger.
This processes is called posting.
- Ah, got it.
A journal is a chronological listing of business events
using the accounting debit-and-credit language.
The ledger is a copy of those same events sorted by
category or account such as cash, supplies,
payables to suppliers and so forth.
But these two big books weren't there when I took over.
What'd you do with them?
- Okay, okay, sorry.
Not long after I started working for the doctors,
they decided to buy a mini computer
and some business software.
- Ah, I remember the computer and the business software.
By today's standard, that computer
was a large piece of work.
About the size of small desk.
- And it was expensive.
My estimate is that the computer and software
cost the equivalent of about $50,000 in today's dollars.
- [Man] So what problems did you have when you converted the
accounting records from the physical books to the computer?
- Well, no problems really.
I just had to make sure that everything added up correctly
in the physical books before I then transferred the balances
into the computer.
- Well that could have been a nightmare.
The partnership of doctors had been in existence
for about 20 years and those books had been maintained
by a series of part-time students during the entire time.
Imagine the errors that could have
accumulated over 20 years.
- Well that was when I really saw the power
of the simple debit-and-credit language of accounting.
It's a marvelous self-checking system.
- So after 20 years, no errors?
- No, there was one error for nine cents.
- Over those 20 years literally millions of dollars
in transactions must have passed
through those books, millions.
- Yup, but because the power of the debit-and-credit system
the error, accumulative error, 20 years, nine cents.
- Well, we need to talk more about this posting process.