13 Basic Accounting Terms Every Business Owner Should Know

Accounting Terms

Knowing basic accounting terms and what they mean makes it easy for you to understand the state of your finance as a business and to formulate strategies to help you profitably scale.

Here are some accounting terms that will help make conversation with your insourced accountant more meaningful.

  1. Certified Public Accountant (CPA)

This is a qualified accountant, a member of an officially accredited professional body of accountants.

  1. Balance Sheet

This is a statement of the assets, liabilities, and capital of a business for a particular financial period, detailing the balance of income and expenditure over the preceding time frame.

  1. Accounts Payable

The amount of money a company owes creditors (suppliers, etc.) in return for goods and/or services they have delivered.

  1. Accounts Receivable

This is money owed to your company by debtors.

  1. Cash Flow

This is the revenue or expense expected to be generated through business activities.

  1. Fixed and Current Assets

Assets are items that bring value, that are owned by the business.

  1. Current assets (CA)

Are those that will be liquidated to cash within one year.

  1. Fixed assets (FA)

Are long-term possessions that will provide benefits to a company for more than one year, such as a real estate, land or major machinery.

  1. Liabilities

These are debts or financial obligations incurred during business operations.

  1. Current liabilities

(CL) are debts that are payable within a year, such as a debt to suppliers.

  1. Long-term liabilities

Are payable over a period of time greater than a year. An example of a long-term liability would be a multi- year mortgage for office space

  1. Return On Investment (ROI)

This is the measure to evaluate the financial position and performance of the business, this is relative to the capital invested.

  1. General Ledger

This is a complete record of financial transactions over the life of a company.

Now that you have an idea of what your accountant does and the terminology they use, contact us to insource a bookkeeper or a payroll officer.

SupportCPA is a leading Texas-based outsourcing company that provides virtual assistants and administrative support for businesses. Moreover, we provide both short and long term virtual outsourcing services customized to suit your business process needs.

Contact us today.