How to Keep Books: The basics that every small business owner must know.

Basic bookkeeping conditions that you must know Accounts payable is the account which is used to track all of the cash that you owe to a third party, such as supplier businesses, banks, governments or anyone you borrowed cash from. An easy example to consider is a mortgage as if you were taking one. You sign a contract telling the bank you will pay them in several installments. Free accounting software

Accounts Receivable:

On the flip side, accounts receivable is the account that keeps track of all the cash that third parties owe to you. Again, it can be customers, banks, companies or anyone that purchased or borrowed from your companies.

Assets:

Assets are simply all the things you or your business owns to help you successfully run the companies. It can range from money, buildings and land right through to tools, vehicles and furniture. Accounting and bookkeeping services

Balance Sheet:

A balance sheet is a detailed report which breaks down the financial situation of your companies. In this report, you’ll find aspects such as assets, liabilities and the capital of your companies. The point of a balance sheet helps to show what your companies owns and owes.

Bookkeeper:

Of course, this is what you need to know or should already know. Bookkeeping is the day-to-day recording of financial operations. It helps to ensure that records of individual financial transactions are accurate and up-to-date.

Capital:

This is simply the cash or other assets which personally belong to you as the owner and not the actual profit you generate from your companies or self-employment.

Costs of Goods Sold:

This is another simple one, as it’s simply all of the cash you spend on products or services which you plan to sell to customers. Bookkeeping services for small business

Equity:

Equity is all of the cash you invest in the business as the owner plus all the accumulated profits. As a small company owner, your equity is shown in a capital account.

Expenses:

This is all of the cash that you spend to operate your business which isn't directly related to the sale of goods or services.

General Ledger:

A general ledger accounting is an account you use to store, sort and summarize all of your transactions. These accounts are arranged in a general ledger which also features the balance sheet and the income statement.

Income Statement:

This is the financial statement which summarizes your financial activity over a period. After calculating the revenue earned, the cost of goods sold and expenses, it calculates your net profit or loss.

Revenue:

Revenue is the total amount of money you make from selling your products and services. It includes any income you receive from sales, interest on loans, dividends on stocks, rent payments, royalties, etc. Trial Balance: Trial balance refers to the process of testing whether your books are balanced. This involves checking each account against the corresponding asset or liability account.

Accounting service is the process of recording transactions and events that happen within a company. It includes keeping track of sales, purchases, expenses, income, and any other transactions that occur during the course of running a business. Bookkeeping is the process of recording these transactions on paper or electronic records.

The above terms are really the basic accounting terms that you should know about - to start with. To keep learning more bookkeeping phrases with easy-to-understand definitions, be sure to check out and bookmark our glossary blog, which we regularly update so you're never confused. Get the software for gst billing.