Open Books Financial

News

Announcements and Knowledge Bits

Nine Accounting Terms Every Business Owners Should Know

Just a quick vocab lesson for our readers. Business owners, we know that accounting REPULSES some of you...but it’s important to know basic terms so you can stay in the financial loop of your business. At minimum, try to know and most importantly, understand the following accounting terms:

  1. FISCAL YEAR - THE 12 MONTH PERIOD THAT CONSTITUTES THE START AND END OF THE ANNUAL FINANCIAL RECORDS FOR A BUSINESS

  2. ASSETS - ANYTHING OF MONETARY VALUE OWNED BY THE BUSINESS

  3. LIABILITIES - FINANCIAL OBLIGATIONS OWED BY THE COMPANY, INCLUDING SALARIES, INCOME TAXES, RENTS, UTILITIES

  4. REVENUE - SUM OF ALL MONIES GENERATED THROUGH THE SALE OF GOODS AND SERVICES, SHARES IN THE COMPANY, INTEREST, ROYALTIES, PROPERTY, ETC.

  5. ACCOUNTS RECEIVABLE - AMOUNTS OF MONEY OWED TO THE BUSINESS BY CUSTOMERS/CLIENTS FOR GOODS AND SERVICES RENDERED

  6. ACCRUALS - REVENUES OR EXPENSES EARNED BUT NOT RECEIVED

  7. EQUITY - MONEY INVESTED IN THE COMPANY BY THE OWNERS

  8. DIVIDENDS - DISTRIBUTIONS OF A PORTION OF COMPANY EARNINGS TO OWNERS

  9. BAD DEBT - A DEBT THAT CANNOT BE RECOVERED

Understand these items and examine how they relate to your business. If you have additional questions or concerns with these items, drop us a note. We would love to help you better understand the financial health of your business or organization!

Nisa Jonesaccounting terms