What Is Always Be Closing—ABC?

Always Be Closing (ABC) is a motivational phrase used to describe a sales strategy. It implies that a salesperson following the regimen should continuously look for new prospects, pitch products or services to those prospects, and ultimately complete a sale.

As a strategy, ABC requires that the salesperson be persistent, but also that they know when to cut their losses and move on to another prospect.

The Basics of ABC

The phrase Always Be Closing was popularized in the 1992 film, “Glengarry Glen Ross” starring Alec Baldwin, Al Pacino, and Jack Lemmon. The movie was written by David Mamet and was based on his Pulitzer Prize-winning play. It emphasized the darker, cutthroat side of the sales industry.

In the film, an aggressive representative from the corporate office is brought in to motivate a group of real estate agents, telling them to sell more property or be fired if they fail. He delivers a profanity-laced tirade, accusing the salespeople of being timid and unmotivated. He flaunts his wealth and success.

During his speech, he flips over a blackboard on which the words “Always Be Closing” are written, and he repeats the phrase several times. The speech backfires, however, because the salespeople resort to a host of unethical tactics to achieve their sales numbers.

Later, in the 2000 film “Boiler Room,” a sales trainer mentoring a young stockbroker asks the trainee if he’s seen “Glengarry Glen Ross.” He then proceeds to quiz him on the meaning of Always Be Closing.

The Effectiveness of Always Be Closing

The term has become a catchall example of a few of the pithy quotations that sales managers often use to motivate their sales staffs and to drive home the importance of being tenacious with prospects. It serves as a reminder that every action a salesperson takes with a client prospect should be done with the intention of moving the sale toward a close.

From the initial rapport-building stage of the sales process to uncovering customer needs and product positioning, the representative should be “closing” the entire time, setting the customer up to to a point where the only logical thing to do is pull out his checkbook.

Real World Example

While it might be entertaining on the big screen, ABC is seldom successful in real life situations for a variety of reasons.

A 2018 study by CSO Insights, an independent research and data provider, indicated that successful salespeople spent, at most, 35% of their time actually selling or “closing” deals. The research found that lead generation, customer follow-up, strategy and planning sessions, and administrative tasks comprised the lion’s share of their time.

As InvestementNews.com reports, research suggests that the ABC mentality is losing its effectiveness. The average 21st-century customer comes armed with significantly more information than a consumer did in 1984, when the David Mamet story was a Pulitzer Prize-winning stage presentation, and even since 1992, when the film was released. Modern customers prefer to shop around and research before making purchases. They’re much less susceptible to slick sales pitches than people once were.

What Is an Aptitude Test?

An aptitude test is an exam used to determine an individual’s skill or propensity to succeed in a given activity. Aptitude tests assume that individuals have inherent strengths and weaknesses and have a natural inclination toward success or failure in specific areas based on their innate characteristics.

Aptitude tests are generally used for job placement, college program entry, and to help people to get an idea of where their interests and aptitudes can take them regarding careers.

Understanding Aptitude Tests

Aptitude tests can be used to determine your capabilities in a variety of subjects. For example, individuals may take an aptitude test to determine the careers that are a good match for their skills and interests. Similarly, high school students may take an aptitude test when thinking about what would be an appropriate college major or whether college is the best choice for them.

In general, aptitude tests measure one’s competence in logical reasoning, numerical skills, or verbal ability; competency can be evaluated through problem-solving tasks and testing one’s critical thinking across various contexts.

When You Might Take an Aptitude Test

Some schools administer aptitude tests to students beginning in elementary school. Combined with intelligence and achievement tests that measure student mastery of academic content, aptitude tests may be used to determine placement in gifted and talented programs or other specific educational tracks.

Language Aptitudes

For example, the Modern Language Aptitude Test (MLAT) measures a student’s potential for successfully mastering foreign languages. Aptitude tests can also help determine if a student needs special education services.

Older Students

For older students, Differential Aptitude Tests (DATs) assess a range of aptitudes from spatial relations to language usage. The results can help administrators make curricular recommendations.

Curriculum Guidance

Counselors might use high scores in mechanical reasoning tests to guide students toward courses that prepare them for engineering or designing studies in college. For instance, students who score well in tests measuring speed, accuracy, and problem-solving might choose coursework in computer science, finance, or other fields requiring attention to detail.

Hiring Decisions

Some companies use aptitude tests to help them make hiring decisions. These tests, called career assessment tests, help human resources (HR) personnel learn more about a prospective employee’s strengths and weaknesses. Career assessment tests may also be used within a company to make promotion decisions.

Situational judgment tests are a specific kind of career aptitude test that can help predict how an employee might respond to specific situations in the workplace. They are also used to assess an employee’s communication style and ability to work within a team.

Some situational judgment tests focus specifically on customer service careers. These tests analyze personality traits predictive of successful public interaction, such as empathy, diplomacy, and patience. Situational judgment tests may also be used to predict future competency in sales-related careers.

Types of Aptitude Tests

Many types of aptitude tests are taken for educational or career discovery and ability purposes. The most common aptitude tests are:

• Mechanical reasoning: These types test your knowledge of physical concepts and are generally used to evaluate you for technical positions.
• Situational judgment: These tests gauge your reactions to situations and your decision-making.
• Diagrammatic/spatial reasoning: These tests see how well you can reach a conclusion based on processes contained in diagrams.
• Abstract reasoning: These measure problem-solving abilities and identify relationships between abstract arrays.
• Numerical reasoning: In these tests, your abilities with numbers, math, and data are tested.
• Verbal reasoning: Your language, reading comprehension, and vocabulary are tested in these types.
• Inductive reasoning: Under the pressure of time, these tests see how well you analyze patterns and data.
• Logical reasoning: Logical reasoning tests measure how well you recognize patterns and sequences and identify relationships between objects.
• Clerical aptitude: Clerical tests measure how fast and accurate you can be, seeing how well you can concentrate.

How to Pass an Aptitude Test

You might have heard that you can’t prepare for an aptitude test, but nothing could be further from the truth. Study guides and practice aptitude tests are readily available online and in community or high school libraries.

Conduct an online search for the type of test you’ll be taking. You’ll find many guides that offer tips on subjects you can read about and practice tests. Once you’ve found the practice tests and some study material:

• Practice the test daily: Practicing every day gives you continuous exposure to the questions and answers and helps you identify weak spots.
• Learn the test format: Remembering the format helps you move through the test. It also allows you to identify areas you need to work on.
• Carefully read the instructions: When you take the test, don’t dive into it. Instead, read all instructions and ensure you understand them, so you don’t work through a section giving wrong answers.
• Manage your testing time: Answer the questions you know first. Then, go back and work on the more challenging questions.

The Bottom Line

An aptitude test is a measure of your ability to learn or perform required tasks and succeed in the environment you’re in. They are not a measure of intelligence—these tests look for your strengths and weaknesses, giving you and the evaluator an idea of your abilities.

Most aptitude tests can indicate success in education and a career, but they are not always 100% accurate predictions. For example, it is possible to score very low on an aptitude test for a specific job and be successful with hard work and dedication—the test may have merely taken a snapshot of your knowledge and abilities at a point where you didn’t know much about the field.

Remember that preparation can help you pass an aptitude test even if you have no prior knowledge in an area—if you think of it as learning something new and interesting, you may surprise yourself with what you can do.

What Is Accounting?

Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analyzing, and reporting these transactions to oversight agencies, regulators, and tax collection entities. The financial statements used in accounting are a concise summary of financial transactions over an accounting period, summarizing a company’s operations, financial position, and cash flows. 

How Accounting Works

Accounting is one of the key functions of almost any business. It may be handled by a bookkeeper or an accountant at a small firm, or by sizable finance departments with dozens of employees at larger companies. The reports generated by various streams of accounting, such as cost accounting and managerial accounting, are invaluable in helping management make informed business decisions. 

The financial statements that summarize a large company’s operations, financial position, and cash flows over a particular period are concise and consolidated reports based on thousands of individual financial transactions. As a result, all professional accounting designations are the culmination of years of study and rigorous examinations combined with a minimum number of years of practical accounting experience.

History of Accounting

The history of accounting has been around almost as long as money itself. Accounting history dates back to ancient civilizations in Mesopotamia, Egypt, and Babylon. For example, during the Roman Empire, the government had detailed records of its finances. However, modern accounting as a profession has only been around since the early 19th century.

Luca Pacioli is considered “The Father of Accounting and Bookkeeping” due to his contributions to the development of accounting as a profession. An Italian mathematician and friend of Leonardo da Vinci, Pacioli published a book on the double-entry system of bookkeeping in 1494.

By 1880, the modern profession of accounting was fully formed and recognized by the Institute of Chartered Accountants in England and Wales. This institute created many of the systems by which accountants practice today. The formation of the institute occurred in large part due to the Industrial Revolution. Merchants not only needed to track their records but sought to avoid bankruptcy as well.

Types of Accounting

Accountants may be tasked with recording specific transactions or working with specific sets of information. For this reason, there are several broad groups that most accountants can be grouped into.

Financial Accounting

Financial accounting refers to the processes used to generate interim and annual financial statements. The results of all financial transactions that occur during an accounting period are summarized in the balance sheet, income statement, and cash flow statement. The financial statements of most companies are audited annually by an external CPA firm.

For some, such as publicly-traded companies, audits are a legal requirement. However, lenders also typically require the results of an external audit annually as part of their debt covenants. Therefore, most companies will have annual audits for one reason or another.

Managerial Accounting 

Managerial accounting uses much of the same data as financial accounting, but it organizes and utilizes information in different ways. Namely, in managerial accounting, an accountant generates monthly or quarterly reports that a business’s management team can use to make decisions about how the business operates. Managerial accounting also encompasses many other facets of accounting, including budgeting, forecasting, and various financial analysis tools. Essentially, any information that may be useful to management falls underneath this umbrella.

Cost Accounting

Just as managerial accounting helps businesses make decisions about management, cost accounting helps businesses make decisions about costing. Essentially, cost accounting considers all of the costs related to producing a product. Analysts, managers, business owners, and accountants use this information to determine what their products should cost. In cost accounting, money is cast as an economic factor in production, whereas in financial accounting, money is considered to be a measure of a company’s economic performance.

Tax Accounting

While financial accountants often use one set of rules to report the financial position of a company, tax accountants often use a different set of rules. These rules are set at the federal, state, or local level based on what return is being filed. Tax accounts balance compliance with reporting rules while also attempting to minimize a company’s tax liability through thoughtful strategic decision-making. A tax accountant often oversees the entire tax process of a company: the strategic creation of the organization chart, the operations, the compliance, the reporting, and the remittance of tax liability.

The Accounting Profession

While basic accounting functions can be handled by a bookkeeper, advanced accounting is typically handled by qualified accountants who possess designations such as Certified Public Accountant (CPA) or Certified Management Accountant (CMA) in the United States.

In Canada, the three legacy designations—the Chartered Accountant (CA), Certified General Accountant (CGA), and Certified Management Accountant (CMA)—have been unified under the Chartered Professional Accountant (CPA) designation.

A major component of the accounting professional is the “Big Four”. These four largest accounting firms conduct audit, consulting, tax advisory, and other services. These firms, along with many other smaller firms, comprise the public accounting realm that generally advises financial and tax accounting.

Careers in accounting may vastly difference by industry, department, and niche. Some relevant job titles may include:

• Auditor (internal or external): ensures compliance with reporting requirements and safeguarding of company assets.
• Forensic Accountant: monitors internal or external activity to investigate the transactions of an individual or business.
• Tax Accountant: strategically plans the optimal business composition to minimize tax liabilities as well as ensures compliance with tax reporting.
• Managerial Accountant: analyzes financial transactions to make thoughtful, strategic recommendations often related to the manufacturing of goods.
• Information and Technology Analyst/Accountant: maintains the system and software in which accounting records are processed and stored.
• Controller: oversees the accounting functions of financial reporting, accounts payable, accounts receivable, and procurement.

The Accounting Rules

In most cases, accountants use generally accepted accounting principles (GAAP) when preparing financial statements in the U.S. GAAP is a set of standards and principles designed to improve the comparability and consistency of financial reporting across industries. Its standards are based on double-entry accounting, a method in which every accounting transaction is entered as both a debit and credit in two separate general ledger accounts that will roll up into the balance sheet and income statement.

In most other countries, a set of standards governed by the International Accounting Standards Board named the International Financial Reporting Standards (IFRS) is used.

Tax accountants overseeing returns in the United States rely on guidance from the Internal Revenue Service. Federal tax returns must comply with tax guidance outlined by the Internal Revenue Code (IRC). Tax accounts may also lean in on state or county taxes as outlined by the jurisdiction in which the business conducts business. Foreign companies must comply with tax guidance in the countries in which it must file a return.

Special Considerations

Accountants often leverage software to aid in their work. Some accounting software is considered better for small businesses such as QuickBooks, Quicken, FreshBooks, Xero, SlickPie, or Sage 50. Larger companies often have much more complex solutions to integrate with their specific reporting needs. This includes add-on modules or in-home software solutions. Large accounting solutions include Oracle, NetSuite, or Sage products.

The Accounting Cycle

Financial accountants typically operate in a cyclical environment with the same steps happening in order and repeating every reporting period. These steps are often referred to as the accounting cycle, the process of taking raw transaction information, entering it into an accounting system, and running relevant and accurate financial reports. The steps of the accounting cycle are:

1. Collect transaction information such as invoices, bank statements, receipts, payment requests, uncashed checks, credit card statements, or other mediums that may contain business transactions.
2. Post journal entries to the general ledger for the items in Step 1, reconciling to external documents whenever possible.
3. Prepare an unadjusted trial balance to ensure all debits and credits balance and material general ledger accounts look correct.
4. Post adjusting journal entries at the end of the period to reflect any changes to be made to the trial balance run in Step 3.
5. Prepare the adjusted trial balance to ensure these financial balances are materially correct and reasonable.
6. Prepare the financial statements to summarize all transactions for a given reporting period.

Cash Method vs. Accrual Method of Accounting

Financial accounts have two different sets of rules they can choose to follow. The first, the accrual basis method of accounting, has been discussed above. These rules are outlined by GAAP and IFRS, are required by public companies, and are mainly used by larger companies.

The second set of rules follow the cash basis method of accounting. Instead of recording a transaction when it occurs, the cash method stipulates a transaction should be recorded only when cash has exchanged. Because of the simplified manner of accounting, the cash method is often used by small businesses or entities that are not required to use the accrual method of accounting.

Imagine a company buys $1,000 of inventory on credit. Payment is due for the inventory in 30 days.

• Under the accrual method of accounting, a journal entry is recorded when the order is placed. The entry records a debit to inventory (asset) for $1,000 and a credit to accounts payable (liability) for $1,000. When 30 days has passed and the inventory is actually paid for, the company posts a second journal entry: a debit to accounts payable (liability) for $1,000 and a credit to cash (asset) for $1,000.
• Under the cash method of accounting, a journal entry is only recorded when cash has been exchanged for inventory. There is no entry when the order is placed; instead, the company enters only one journal entry at the time the inventory is paid for. The entry is a debit to inventory (asset) for $1,000 and a credit to cash (asset) for $1,000.

The difference between these two accounting methods is the treatment of accruals. Naturally, under the accrual method of accounting, accruals are required. Under the cash method, accruals are not required and not recorded.

Why Accounting Is Important

Accounting is a back-office function where employees may not directly interface with customers, product developers, or manufacturing. However, accounting plays a key role in the strategic planning, growth, and compliance requirements of a company.

• Accounting is necessary for company growth. Without insight into how a business is performing, it is impossible for a company to make smart financial decisions through forecasting. Without accounting, a company wouldn’t be able to tell which products are its best sellers, how much profit is made in each department, and what overhead costs are holding back profits.
• Accounting is necessary for funding. External investors want confidence that they know what they are investing in. Prior to private funding, investors will usually require financial statements (often audited) to gauge the overall health of a company. The same rules pertain to debt financing. Banks and other lending institutions will often require financial statements in compliance with accounting rules as part of the underwriting and review process for issuing a loan.
• Accounting is necessary for owner exit. Small companies that may be looking to be acquired often need to present financial statements as part of acquisition or merger efforts. Instead of simply closing a business, a business owner may attempt to “cash-out” of their position and receive compensation for building a company. The basis for valuing a company is to use its accounting records.
• Accounting is necessary to make payments. A company naturally incurs debt, and part of the responsibility of managing that debt is to make payments on time to the appropriate parties. Without positively fostering these business relationships, a company may find itself with a key supplier or vendor. Through accounting, a company can always know who it has debts to and when those debts are coming due.
• Accounting is necessary to collect payments. A company may agree to extend credit to its customers. Instead of collecting cash at the time of an agreement, it may give a customer trade credit terms such as net 30. Without accounting, a company may have a hard time keeping track of who owes it money and when that money is to be received.
• Accounting may be required. Public companies are required to issue periodic financial statements in compliance with GAAP or IFRS. Without these financial statements, a company may be de-listed from an exchange. Without proper tax accounting compliance, a company may receive fines or penalties.

Example of Accounting

To illustrate double-entry accounting, imagine a business sends an invoice to one of its clients. An accountant using the double-entry method records a debit to accounts receivables, which flows through to the balance sheet, and a credit to sales revenue, which flows through to the income statement.

When the client pays the invoice, the accountant credits accounts receivables and debits cash. Double-entry accounting is also called balancing the books, as all of the accounting entries are balanced against each other. If the entries aren’t balanced, the accountant knows there must be a mistake somewhere in the general ledger.