When accountants use parentheses around a number, it typically indicates that the number is negative. This is a common practice in financial statements and accounting reports to clearly differentiate between positive numbers (profits, assets) and negative numbers (losses, liabilities).
For example, if you see a figure like ($500), it means that there is a negative value of 500, often representing a loss or an outflow of funds. This method enhances readability and helps stakeholders quickly grasp the financial health of an entity without having to constantly check for minus signs.
Using parentheses instead of a negative sign can also help prevent confusion in complex statements, making it easier to track totals and subtotals in a visual format. Overall, this convention is an important part of accounting practices, improving clarity in financial documentation.