--- title: "Meaning & Key Takeaway of: Accounting is a big subject and there are…" description: "\"Accounting is a big subject and there are huge forces in play. The entire momentum of existing thinking and existing custom is in a direction that allo..." image: "https://sms4smile.com/quotes/i/1af/charlie-munger-458_accounting_accounting-is-a-big-subject-and-there-ar_1965349.jpg" --- # Accounting is a big subject and there are huge forces in… ![“Accounting is a big subject and there are huge forces in play. The entire momentum of existing thinking and existing custom is in a direction that allows terrible follies to happen, and the terrible follies have terrible consequences.” quote by Charlie Munger](https://sms4smile.com/quotes/i/1af/charlie-munger-458_accounting_accounting-is-a-big-subject-and-there-ar_1965349.jpg) [Download](https://sms4smile.com/quotes/i/1af/charlie-munger-458_accounting_accounting-is-a-big-subject-and-there-ar_1965349.jpg) [Open image](https://sms4smile.com/quotes/i/1af/charlie-munger-458_accounting_accounting-is-a-big-subject-and-there-ar_1965349.jpg) > “Accounting is a big subject and there are huge forces in play. The entire momentum of existing thinking and existing custom is in a direction that allows terrible follies to happen, and the terrible follies have terrible consequences.” [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Existing conventions drive costly mistakes; recognizing systemic inertia is key to avoiding large-scale errors. **In simple terms:** Customs cause big mistakes; be aware of momentum. Key Takeaway Question prevailing assumptions before acting. Themes economics behavioral finance systems risk management Mood cautious analytical Type advice philosophical When to use this quote - financial planning - corporate strategy - public policy - risk assessment Key Concepts cognitive bias institutional inertia decision making policy design Questions to Reflect On - What assumptions are you following uncritically? - How can you disrupt harmful momentum? A Different Perspective Changing entrenched habits is difficult. ★ ★ ★ ★ ★ No ratings yet [Consequence](https://sms4smile.com/quotes/about/consequence/) [Customer](https://sms4smile.com/quotes/about/customer/) [Customs](https://sms4smile.com/quotes/about/customs/) [Folly](https://sms4smile.com/quotes/about/folly/) [Momentum](https://sms4smile.com/quotes/about/momentum/) [Play](https://sms4smile.com/quotes/about/play/) [Thinking](https://sms4smile.com/quotes/about/thinking/) ## Related quotes > [Children of domestic violence, of course, suffer terrible consequences.](https://sms4smile.com/quotes/letitia-james/children-of-domestic-violence-of-course-suffer-terrible-consequences/) [Letitia James](https://sms4smile.com/quotes/author/letitia-james/) > [I've seen firsthand the terrible consequences of drug abuse. 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Do you remember what they used to say about Lord Byron?”](https://sms4smile.com/quotes/kathleen-tessaro/but-other-times-it-has-terrible-consequences-do-you-remember-what/) [Kathleen Tessaro](https://sms4smile.com/quotes/author/kathleen-tessaro/) > [Greed can't again lead the way. We've taken that route before with terrible consequences for this nation and its people.](https://sms4smile.com/quotes/johanna-siguroardottir/greed-can-t-again-lead-the-way-we-ve-taken-that-route-before-with/) [Johanna Siguroardottir](https://sms4smile.com/quotes/author/johanna-siguroardottir/) > [To say accounting for derivatives is Americais a sewer is an insult to sewage.](https://sms4smile.com/quotes/charlie-munger/to-say-accounting-for-derivatives-is-americais-a-sewer-is-an-insult/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [Proper accounting is like engineering. You need a margin of safety. 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And once this has happened - people…](https://sms4smile.com/quotes/charlie-munger/the-stupid-and-dishonest-accountants-allowed-the-genie-of-totally/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [The SEC does way more good than harm - the last thing I would do is get rid of the SEC...if accounting were thoroughly…](https://sms4smile.com/quotes/charlie-munger/the-sec-does-way-more-good-than-harm-the-last-thing-i-would-do-is-get/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [ Everyone caved, adopted loose \[accounting\] standards, and created exotic derivatives linked to theoretical models. As a result, all kinds of earnings, blessed by accountants,… ](https://sms4smile.com/quotes/charlie-munger/everyone-caved-adopted-loose-accounting-standards-and-created-exotic/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [ Anyone with an engineering frame of mind will look at \[accounting standards\] and want to throw up. ](https://sms4smile.com/quotes/charlie-munger/anyone-with-an-engineering-frame-of-mind-will-look-at-accounting/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [ Accounting incomes were reduced by discrepancy \[ but\] "the net amount paid by lawyers for lawyerly discrepancy is close to zippo. In this case,… ](https://sms4smile.com/quotes/charlie-munger/accounting-incomes-were-reduced-by-discrepancy-but-the-net-amount/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) ## More by Charlie Munger > [Almost all good businesses engage in 'pain today, gain tomorrow' activities.](https://sms4smile.com/quotes/charlie-munger/almost-all-good-businesses-engage-in-pain-today-gain-tomorrow/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [If you want good behavior, don't pay on a commission basis. Our judges aren't paid so much a case. We keep them pretty well…](https://sms4smile.com/quotes/charlie-munger/if-you-want-good-behavior-don-t-pay-on-a-commission-basis-our-judges/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [Acquire worldly wisdom and adjust your behavior accordingly. If your new behavior gives you a little temporary unpopularity with your peer group then to…](https://sms4smile.com/quotes/charlie-munger/acquire-worldly-wisdom-and-adjust-your-behavior-accordingly-if-your/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [I think time and time again, in reality, psychological notions and economic notions interplay, and the man who doesn't understand both is a damned…](https://sms4smile.com/quotes/charlie-munger/i-think-time-and-time-again-in-reality-psychological-notions-and/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [I have what I call an iron prescription that helps me keep sane when I naturally drift toward preferring one ideology over another and…](https://sms4smile.com/quotes/charlie-munger/i-have-what-i-call-an-iron-prescription-that-helps-me-keep-sane-when/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [The tax code gives you an enormous advantage if you can find some things you can just sit with.](https://sms4smile.com/quotes/charlie-munger/the-tax-code-gives-you-an-enormous-advantage-if-you-can-find-some/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [The great lesson in microeconomics is to discriminate between when technology is going to help you and when it's going to kill you. And…](https://sms4smile.com/quotes/charlie-munger/the-great-lesson-in-microeconomics-is-to-discriminate-between-when/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [Some years ago one oil company bought a fertilizer company, and every other major oil company practically ran out and bought a fertilizer company.…](https://sms4smile.com/quotes/charlie-munger/some-years-ago-one-oil-company-bought-a-fertilizer-company-and-every/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [ They \[Mc Donalds\] take people and give them a first job, which enables them to get a second job. They do a very good… ](https://sms4smile.com/quotes/charlie-munger/they-mc-donalds-take-people-and-give-them-a-first-job-which-enables/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [What good is envy? It’s the one sin you can’t have any fun at.](https://sms4smile.com/quotes/charlie-munger/what-good-is-envy-it-s-the-one-sin-you-can-t-have-any-fun-at/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [We believe that almost all really good investment records will involve relatively little diversification. The basic idea that it was hard to find good…](https://sms4smile.com/quotes/charlie-munger/we-believe-that-almost-all-really-good-investment-records-will/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [It is way less certain to be a wonderful business in the future. The threat is alternative mediums of information. Every newspaper is scrambling…](https://sms4smile.com/quotes/charlie-munger/it-is-way-less-certain-to-be-a-wonderful-business-in-the-future-the/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [In the corporate world, if you have analysts, due diligence, and no horse sense, you've just described hell.](https://sms4smile.com/quotes/charlie-munger/in-the-corporate-world-if-you-have-analysts-due-diligence-and-no/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [We have to have a special insight, or we'll put it in the 'too tough' basket. All of you have to look for a…](https://sms4smile.com/quotes/charlie-munger/we-have-to-have-a-special-insight-or-we-ll-put-it-in-the-too-tough/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [I've heard that one-half of the students at elite schools want to go into private equity or hedge funds. They want to keep up…](https://sms4smile.com/quotes/charlie-munger/i-ve-heard-that-one-half-of-the-students-at-elite-schools-want-to-go/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) [Explore all 544 Charlie Munger quotes ](https://sms4smile.com/quotes/author/charlie-munger/) ## More Accounting quotes > [We do not know enough about how the present will lead into the future. We shall never be able to say, "Ha! My perception,…](https://sms4smile.com/quotes/gregory-bateson/we-do-not-know-enough-about-how-the-present-will-lead-into-the-future/) [Gregory Bateson](https://sms4smile.com/quotes/author/gregory-bateson/) > [“Outer happiness has Diminishing Marginal Utility; the more it grows, the satisfaction decreases. Resort to inner happiness.”](https://sms4smile.com/quotes/vikrmn-ca-vikram-verma/outer-happiness-has-diminishing-marginal-utility-the-more-it-grows/) [Vikrmn: CA Vikram Verma](https://sms4smile.com/quotes/author/vikrmn-ca-vikram-verma/) > [Regulations for international accounting and funding will have to be examined to identify policies that inadvertently discourage institutional investors from putting their resources into…](https://sms4smile.com/quotes/jose-angel-gurria/regulations-for-international-accounting-and-funding-will-have-to-be/) [Jose Angel Gurria](https://sms4smile.com/quotes/author/jose-angel-gurria/) > [There is no business like show business. There is also no business like certified public accounting, but that doesn't rhyme as well.](https://sms4smile.com/quotes/craig-shaw-gardner/there-is-no-business-like-show-business-there-is-also-no-business/) Craig Shaw Gardner > [“With great goals, comes the high costs; both fixed and variable. Time is the fixed cost; efforts, variable. Spend passionately.”](https://sms4smile.com/quotes/vikrmn-ca-vikram-verma/with-great-goals-comes-the-high-costs-both-fixed-and-variable-time-is/) [Vikrmn: CA Vikram Verma](https://sms4smile.com/quotes/author/vikrmn-ca-vikram-verma/) > [The reaction of weak management to weak operations is often weak accounting.](https://sms4smile.com/quotes/warren-buffett/the-reaction-of-weak-management-to-weak-operations-is-often-weak/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [“Financial statements are my novels, I am a Chartered Accountant.”](https://sms4smile.com/quotes/vikrmn-ca-vikram-verma/financial-statements-are-my-novels-i-am-a-chartered-accountant/) [Vikrmn: CA Vikram Verma](https://sms4smile.com/quotes/author/vikrmn-ca-vikram-verma/) > [The religious hypothesis, therefore, must be considered only as a particular method of accounting for the visible phenomena of the universe: but no just…](https://sms4smile.com/quotes/david-hume/the-religious-hypothesis-therefore-must-be-considered-only-as-a/) [David Hume](https://sms4smile.com/quotes/author/david-hume/) > [Accounting consequences do not influence our operating or capital-allocation decisions. When acquisition costs are similar, we much prefer to purchase $2 of earnings that…](https://sms4smile.com/quotes/warren-buffett/accounting-consequences-do-not-influence-our-operating-or-capital/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [By their victory, the 3rd, 4th and 5th Marine Divisions and other units of the Fifth Amphibious Corps have made an accounting to their…](https://sms4smile.com/quotes/chester-w-nimitz/by-their-victory-the-3rd-4th-and-5th-marine-divisions-and-other-units/) [Chester W. Nimitz](https://sms4smile.com/quotes/author/chester-w-nimitz/) > [“Invest in self-improvement, be it for learning, be it for earning.”](https://sms4smile.com/quotes/vikrmn-ca-vikram-verma/invest-in-self-improvement-be-it-for-learning-be-it-for-earning/) [Vikrmn: CA Vikram Verma](https://sms4smile.com/quotes/author/vikrmn-ca-vikram-verma/) > [“In the race to scale a startup, overlooking financial planning is like to building a skyscraper on shaky ground. True growth stems from decisions…](https://sms4smile.com/quotes/jason-hishmeh/in-the-race-to-scale-a-startup-overlooking-financial-planning-is-like/) Jason Hishmeh > [One of the things that we're missing from our political dialogue right now is the idea that the United States is a home. It…](https://sms4smile.com/quotes/stephen-miller/one-of-the-things-that-we-re-missing-from-our-political-dialogue/) [Stephen Miller](https://sms4smile.com/quotes/author/stephen-miller/) > [There's no business like show business, but there are several businesses like accounting.](https://sms4smile.com/quotes/david-letterman/there-s-no-business-like-show-business-but-there-are-several/) [David Letterman](https://sms4smile.com/quotes/author/david-letterman/) > [“Debit the knowledge; credit the books.”](https://sms4smile.com/quotes/vikrmn-ca-vikram-verma/debit-the-knowledge-credit-the-books/) [Vikrmn: CA Vikram Verma](https://sms4smile.com/quotes/author/vikrmn-ca-vikram-verma/) Browse all 352 Accounting quotes ```json { "@context": "https://schema.org", "@graph": [ { "@type": "Quotation", "text": "Accounting is a big subject and there are huge forces in play. 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