Depreciation

Definition

The accounting practice of acknowledging that everything you own is slowly becoming worthless, which is depressing when applied to assets and relatable when applied to your car. It's basically writing a slow obituary for office furniture.

Example Usage

"According to depreciation, our $50,000 server is now worth $12. We still use it every day. It has feelings too, you know."

Related Terms

Beginner

penny-stock

Stocks trading below $5 per share, typically on over-the-counter markets with minimal regulation or scrutiny. It's where pump-and-dump schemes go to flourish and retail investors go to lose their money quickly.

💰 Finance / Accounting

Intermediate

managerial accounting

Internal accounting focused on providing information for management decisions rather than external reporting. Unlike financial accounting's rigid rules, managerial accounting embraces whatever analysis helps executives decide which division to blame for poor performance.

💰 Finance / Accounting

Intermediate

materiality threshold

The dollar amount below which errors or omissions don't matter enough to disclose in financial statements—essentially the accounting version of 'close enough for government work.' It's how auditors decide which issues are worth losing sleep over.

💰 Finance / Accounting

Advanced

fully diluted shares

The total number of shares that would be outstanding if all convertible securities, options, and warrants were exercised—basically the shareholding version of inviting everyone who might show up to the party. It shows what ownership really looks like after employees exercise options and investors convert preferred shares.

💰 Finance / Accounting

Intermediate

multiple

In finance, it's the magical number you get when dividing a company's stock price by its earnings—the higher the multiple, the more investors believe in fairy tales about future growth. Also known as the P/E ratio, it tells you how many years of current profits you're paying for today. Basically, it's the market's way of saying 'trust me bro' with numbers.

💰 Finance / Accounting

Advanced

big bath

The strategy of writing off massive losses all at once to get the bad news over with, typically when a new CEO arrives and can blame everything on their predecessor. It's financial spring cleaning with someone else's mess.

💰 Finance / Accounting

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