7 Essential Bookkeeping Terms Every Business Owner Should Know

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Out of all those small business management things, doing finances is utterly important and complex. While you might go well with the basics of accounting and bookkeeping at the start, you need comprehensive knowledge to manage books as your business grows. Here, you will learn about the bookkeeping lingo that might make things easier for you whether you hire a professional or do it yourself.

  1. Sale: The term covers an act that you use to generate cash (or money) for your company. Usually, it includes selling a service or product and is sometimes referred to as “money in.”
  2. Expenditure: The “money out” segment includes all the transactions that you are paying for as a business. Common expenses that almost every company pays for salaries, rent, supplies, and marketing.
  3. Asset: When you are operating a business, you are owning items in your firm’s name. All those items like computers, desks, chairs, software, subscriptions, and more are collectively called assets.
  4. Accounts Receivable: When you send an invoice to a customer or client, the buying party that owes you money is known as accounts receivable.
  5. Liability: This term goes opposite to the accounts receivable. Liability is usually different from an expense in the form that it is a long-term one such as a loan.
  6. Revenue and Profit: Revenue refers to money generated over a particular period. When you deduct expenses from it, you are left with the profit.
  7. Business Equity: The term is a calculation of your business value, for which you need to subtract liabilities from assets.

While managing books can be daunting for someone from a non-finance background, accounting bookkeeping services in Sydney ensure you reap the most of it.