Talking Cents

Accounting Terms: Every Other Term That Starts With The Letter D

Managing your own accounts means you need to be as familiar with the process as any other professional accountant. Thankfully, that doesn't have to be difficult, since our team of professionals is more than capable of bringing you up to speed on the lingo so you won't have to bust out a dictionary come tax time.

Not Everything Holds Its Value Forever
If you've ever tried to sell old items you've got lying around in your home, be it a deprecated computer, aging furniture, or even a car you no longer need, then you're probably already familiar with this idea. Unfortunately, not everything is able to hold its value forever, which means businesses need to be able to handle the depreciation of their assets. Fortunately, that depreciation doesn't have to be a total loss, as you can generally claim all sorts of falling value as a taxable expense, allowing you to recover some of your purchase costs as a tax deduction.

Don't Put All Your Eggs In The One Basket
We might use this expression today to teach children to diversify their interests to try to avoid pain and failure, but that doesn't make the lesson any less pertinent for businesses. Diversification is a risk management strategy that aims to minimise the risk of financial failure due to poor investments by spreading out assets across a portfolio. That portfolio may be comprised entirely of stocks, or it might be made up of the various cheeses your boutique cheese shop sells. Whatever it is, if you want to avoid waking up one day to discover you've become broke overnight, you should make sure you're diversifying wherever possible.

It Pays To Invest
On the ASX, there's a healthy number of dividend-paying stocks, funds, and equities, which can be an excellent way to allow your wealth to increase naturally. A dividend is a portion of a company's profit that is paid forward to their shareholders, and can be distributed as either cash or additional stock in the company. It's worth doing some research before you invest to determine if you'll be eligible for dividends, how often they're paid, and roughly how much they're worth per share.

Sometimes The More Complicated Way Is The Way To Go
A double-entry bookkeeping system demands that every entry to one account needs to have a correspondingly negative entry in another account. If you make a purchase for your business, that means you need to enter both an expense in one account and an asset in another, ensuring you're keeping your books balanced in their entirety. By comparison, a single-entry bookkeeping system only requires you to enter costs and profits once, which may be considered simpler by many people.

You'd Call A Doctor If You Were Sick, Wouldn't You?
Your financial health can be just as important for your business as your physical health, so it's important that you don't let it slip. If you need help managing your accounts, then you shoulder consider reaching out to the M.A.S Partners, the best business accountants around, for help. To speak with our team of small business accountants in Sydney about what we can do for you, call us on (02) 9211 5000.