Remember that advert which said “if you drink and drive you’re an idiot”. Well the same can be said for anyone doing their own accounts. Only an idiot thinks they have the same skills as chartered accountant who has at least seven years of university education and professional training behind them (and after all that they’re only considered a junior accountant)!   The thing about getting your accounts wrong is that the mistakes are invisible. You won’t even know about them for years and by then, the penalties will’ve morphed from mere Gremlins into bankrupting monsters.

Granted, the legislation is changing to make it easier for small companies but most accounts are done primarily for tax so nothing has really changed for most people. If that isn’t enough to put you off then see if you can answer the following questions perfectly because then, and only then, is there a small chance you might be able to do your own accounts correctly:

1. Do you know the minumum disclosure requirements (form of the accounts, accounting policies, valuation principles, reconcilations, associated person transactions etc)?  [Getting this wrong can result in criminal convictions & penalties of up to $50,000 for each offence]
2. Tax-wise, what part of your Accident Compensation bill can’t you claim?
3. How do you record Imputation credits, reconcile them to retained earnings and calculate continuity?
4. Do you know the difference between Annual Accounts, Annual Report and Financial Statements?
5. Do you have a solid understanding of when the attribution rules apply?
6. If you have $100 of entertainment will $50 be shown as non-deductible in the accounts?  [The correct answer is No which might surprise you! It’s true, don’t even try and fight it us on this one because we know the section references in the legislation – do you?]
7. What’s the difference between an operating lease and a finance lease for tax and GST purposes?
8. When don’t you get an immediate claim for a fixed asset?

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