WHAT DOES A NUMBER IN PARENTHESES/BRACKETS MEAN IN ...

There are several reasons that parentheses/brackets may be used, each of which I have explained below:

A negative amount

A number in parentheses/brackets can often indicate that a number is negative. In UK accounting, this is often used on the income statement/profit and loss to indicate that there is a loss – or a negative profit.

Subtraction is required

Parentheses/brackets are often used to indicate that a number should be subtracted in a calculation.

Losses

If the bottom line of a set of accounts is shown in parentheses/brackets this is often because a loss has been made. A loss is incurred when the expenditure is greater than the income. An amount not shown in parentheses/brackets would indicate a profit has been made.

A credit balance in an account that usually has a debit balance, or vice versa

In accounting parentheses/brackets can be used to show that an entry made in an account is not what is usually expected. For instance, a rent expense account will have the entries for rent expenditure shown as a debit balance. To make it clear that a credit entry has been made you can place this entry in the account in parentheses/brackets e.g. a bank payment to the landlord which would be a credit entry.

Credit entries

Some accountants use parentheses/brackets to always indicate that a credit entry has been made so that it is easily identifiable against a debit entry.

Unfavourable variances

When completing standing costing analysis a negative entry often shows that the outcome is unfavourable. In comparison favourable outcomes are shown without parentheses/brackets.

Budget comparisons – overspending

When comparing budgets with what was actually spent, overspending is often shown in parentheses/brackets. Amounts that are under-spent are shown without parentheses/brackets. This is a very similar use to variances.

This list is not exhaustive, as some accountants may choose to be creative with their parentheses/brackets!

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