When reporting losses, use simple language please
Well, there is a way around the challenge of being both forthright (by unequivocally stating that a loss was made) and mathematically accurate (by using the correct sign).Accountants usually indicate negative numbers by putting them in brackets. PHOTO | FILE
What you need to know:
- Accountants usually indicate negative numbers by putting them in brackets. For example, –300,000 is written as (300,000). Thus, if a company makes a Sh300,000 loss, some reports will state this as “Profit/(Loss) = (Sh300,000).
- A toothpaste manufacturer posted an advert on social media recently advising parents to encourage children to brush their teeth by giving a surprise gift to the one who finishes brushing first.
- Unfortunately, that advice encourages children to brush in a hurry, yet brushing teeth should be done carefully and systematically and for a minimum of two minutes. When I posted my observation on the internet, some people said that that time was too short while others claimed it is too long.
After reading last week’s article about negative losses, Githuku Mungai notes that while he agrees with my reasoning, he suspects that companies that indicate losses as negative profits are trying to hide something. He says he prefers it to be stated as a loss “with the negative and all”.
Well, there is a way around the challenge of being both forthright (by unequivocally stating that a loss was made) and mathematically accurate (by using the correct sign).
Accountants usually indicate negative numbers by putting them in brackets. For example, –300,000 is written as (300,000). Thus, if a company makes a Sh300,000 loss, some reports will state this as “Profit/(Loss) = (Sh300,000).
In other words, if the number is in brackets, like (Sh300,000), then it is a (loss). Now, notice that the word “loss” is also in brackets. Therefore, if we read (Sh300,000) as “negative Sh300,000”, then we should also read (loss) as “negative loss”.
So, the report is saying: “the negative loss was negative Sh300,000”. It is mathematically correct and it agrees with the point I made last week.
Finally, some accountants, perhaps in a bid to sound sophisticated, talk about “the profit and loss account”. Now that is utter nonsense! You cannot make profit AND loss at the same time! It is either profit OR loss. That’s why it is written as “Profit / Loss” – the “/” means “OR”.
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ALARMING ADVICE
A toothpaste manufacturer posted an advert on social media recently advising parents to encourage children to brush their teeth by giving a surprise gift to the one who finishes brushing first.
Unfortunately, that advice encourages children to brush in a hurry, yet brushing teeth should be done carefully and systematically and for a minimum of two minutes. When I posted my observation on the internet, some people said that that time was too short while others claimed it is too long.
To settle the matter, I posted the brushing lesson that we were given in school by people from the Ministry of Health in 1974 – I still remember it vividly! First, they taught us about our dental formula: we have two types of teeth – smiling teeth (the front ones) and chewing teeth (the molars).
There are two sets of smiling teeth – the upper and lower ones. There are four sets of chewing teeth – upper left, lower left, upper right, and lower right.
Each set of the smiling teeth has two surfaces to be brushed –inner and outer. That is, four surfaces in total. The chewing teeth have three surfaces per set – inner, outer and top. Therefore, the four chewing sets have 12 surfaces altogether.
So, there are 4 + 12 = 16 surfaces in all to be brushed. If you spend just 10 seconds on each, you will take a total of 160s; that is two minutes and 40s. For that reason, if you ever spend less than two minutes brushing your teeth, then you are not doing it right.
