Accounting Terms Every Small Business Owner Needs To Know

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Accounting Terms Every Small Business Owner Needs
To Know
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• The process of recording financial transactions
  undertaken by your business is basically what
  accounting is each transaction is documented in
  such a way that it can be analyzed in order to
  help you make sensible decisions regarding your
  business.
• There are many different accounting terms used
  during this process, some of which may be
  confusing to new business owners. Below are some
  of the most frequently used terms along with a
  brief description

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• Accounting Equation Also known as the balance
  sheet equation this represents the relationship
  between the business owners assets, liabilities
  and equity.
• Balance Sheet Assets, liabilities and equity
  displayed in a dated, basic accounting financial
  report.
• Account Payable An amount due to the company as
  the result of a sale that has yet to be paid.

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• Account Receivable An amount due to the company
  from a debtor who has yet to pay for a product or
  service that was sold to them on credit.
• Bookkeeping This term describes the recording
  aspect of accounting such as when transactions
  are entered into a journal, invoices are prepared
  or bills are paid.
• Liabilities A legally binding obligation of a
  business towards its creditors accounts payable
  is an example of this.

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• Asset Any kind of resource or property owned by
  an individual or an organization.
• Journal A place where business transactions are
  first recorded before they are moved to ledger
  accounts and placed into appropriate groups.
• Budgeting This involves the planned allocation
  of available funds to different departments of a
  company.

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• Equity The difference between the values of
  assets or interests and the cost of the
  liabilities of something owned.
• Trial Balance Ledger accounts are listed here
  along with their debit and credit balances they
  should all total zero.
• Capital Stock The equity of a business that has
  resulted from the sale of shares and corporate
  stock to its shareholders.

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• Cost Accounting This forms a part of basic
  accounting, where the costs of producing a
  product or service are collected and controlled.
• Cost Of Goods Sold The cost of a product or
  service is calculated taking into consideration
  factors such as, materials, labor costs and
  freight or postage, etc.
• Invoice A statement that is itemized to show
  goods or services purchased and sold.
• Purchase Order A form used by the purchasing
  department when they place orders, authorizing
  the supplier/manufacturer to ship the product to
  the customer.

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• Chart Of Accounts Assets, liabilities, equity,
  revenue and expenses are listed here.
• Income Statement This is a basic statement
  referring to the revenue earned by a business and
  the expenses that were incurred while earning the
  revenue, the corresponding net profit or loss is
  also shown here.
• Controller This person would be responsible for
  the whole accounting function of a large
  business they would report to the business owner
  or Vice President of Finance.

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• At Heyer Associates, we proactively assist our
  individual and small business clients in meeting
  their goals. Our key area of focus is ensuring
  that our clients remain compliant with federal
  and state tax laws by providing them with high
  quality accounting and tax preparation service in
  Miami. If you are looking for an accountant in
  Miami, Heyer Associates would be a right option.