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:
FISCAL YEAR - THE 12 MONTH PERIOD THAT CONSTITUTES THE START AND END OF THE ANNUAL FINANCIAL RECORDS FOR A BUSINESS
ASSETS - ANYTHING OF MONETARY VALUE OWNED BY THE BUSINESS
LIABILITIES - FINANCIAL OBLIGATIONS OWED BY THE COMPANY, INCLUDING SALARIES, INCOME TAXES, RENTS, UTILITIES
REVENUE - SUM OF ALL MONIES GENERATED THROUGH THE SALE OF GOODS AND SERVICES, SHARES IN THE COMPANY, INTEREST, ROYALTIES, PROPERTY, ETC.
ACCOUNTS RECEIVABLE - AMOUNTS OF MONEY OWED TO THE BUSINESS BY CUSTOMERS/CLIENTS FOR GOODS AND SERVICES RENDERED
ACCRUALS - REVENUES OR EXPENSES EARNED BUT NOT RECEIVED
EQUITY - MONEY INVESTED IN THE COMPANY BY THE OWNERS
DIVIDENDS - DISTRIBUTIONS OF A PORTION OF COMPANY EARNINGS TO OWNERS
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!