LEARN SOMETHING NEW EVERY DAY

While you may not want to study accountancy or understand the full financial statements presented to you by your accountant, understanding what you are being asked to sign each year, is important.

In school I had a fantastic accountancy teacher, Mr Farrell. While in other classes I wasn’t the most attentive or bright, Mr Farrell made accountancy easy (to me at least). It was logical. Once I saw a pattern of how to treat different items (it wasn’t like English where I had to be creative). It was logical, everything had a place and I liked it. As we progressed through college and through my working life, I’ve realised that I like logic. I like black and white. I don’t enjoy anything legal (in the strict legal sense). I don’t like ‘grey areas’. I don’t like not knowing how things might turn out. I progressed through my career as a trainee accountant sorting out mistakes of others. Fixing up accounts and issues where they occurred and it all felt very logical. I enjoy being able to help get things back on track again for clients.

It still feels like this to me; logical and clear. It can to you too.

During my trainee years (and after), I always enjoyed the fact that I often learned something new every day, see something different in a new industry or with a new client and it kept my interest. Learning can definitely keep you interested but the better part of all of this is, I can help clients understand their own numbers better. In turn, helping them make better decisions and watch them make more money in the process.

Below are some definitions and explanations of accounting terms. If you have a small business in Ireland, you will most likely not require an audit. This means the accountant you hire will present the accounts to you based on your workings. They may or may not, dig too deeply into your numbers to check how correct these are. If you have an internal bookkeeper or management accountant preparing monthly accounts, one point to be aware of is their knowledge of taxes. For many small businesses in Ireland, the biggest issue a director may face is when the Revenue visit or do an audit and it uncovers some unexpected, costly surprises. This can cause serious stress and usually it’s then the director finds out what knowledge the bookkeeper or accountant had in relation to their company.

Definitions / explanations of the accounts

Below is a summary of the basic terms. Understanding your financial statements as you sign them will help you feel confident and in control of your financial future. Take the time to read your financial statements with the notes below to help you learn something new today. This is a simplistic overview and no doubt there is a lot more we could discuss about all items. This is only a starting point. Be sure to query anything you are unsure of and do not use this instead of having a conversation about anything you are unsure of.