Are Receivable an Asset or Liability

{name withheld}

I applaud your curiosity and openness to learn. While not a financial person myself, I did learn one very important financial distinction in my MBA program. The difference between Management Accounting versus GAAP type Financial Accounting. The first is to help how business is conducted on a daily or weekly basis, while the latter is an monetary assessment tool comparing two periods of time and is required by various government bodies.

The mistake in many organizations is to make management decisions based only using assessment tools. When Dr. Deming said that management was the biggest producer (source?) of waste, I believe this misuse of assessment tools is only one of many such examples he saw.

My impression is that LEAN accounting is a management accounting tool. Not a financial accounting tool. Some concepts may bridge across the two, while other concepts may be unique.

For further research here are three avenues I found informative (as a nonfinancial person):

First is a book written by a CFO of Lantech (Jean Cunningham) and a former VP of Finance and director of Wiremold (Orest Fiume). The title is 'Real Numbers: Management Accounting in a Lean Organization.'

Second is something that Theory Of Constraints people call 'Throughput Accounting.' This investigation may be a challenge. TOC people like their 'special language' even more than LEAN practitioners. However, the thinking appears good and the arguments seem clear.

Third is anything written by H. Thomas Johnson. Years ago he billed himself as a 'recovering management accountant.' I respect that approach. His writings are always thought provoking. http://www.solonline.org/repos...?item_id=443237

Here is a blurb about him from a Dec 1, 2006 article titled 'Manage a Living system, Not a Ledger' published by Manufacturing Engineering Magazine.

H. Thomas Johnson is Professor of Business Administration at Portland State University (Portland, OR). This article draws from his essay Lean Dilemma: Choose System Principles or Management Accounting Controls - Not Both in Lean Accounting and Performance Measurement: the Relentless Pursuit of Perfection, Joe Stenzel, editor, (New York: John Wiley, 2007), Chapter 1. His most recent book, Profit Beyond Measure: Extraordinary Results Through Attention to Work and People (New York: The Free Press, 2000), was awarded the 2001 Shingo Prize for Excellence in Manufacturing Research. Further information on Johnson's career and his other books is available at: http://www.pdx.edu/sba/fp-h-thomas-johnson

He may be reached by e-mail at: tomj@sba.pdx.edu. 

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