Understanding the Common Terms Used in Bookkeeping

In San Jose, CA, individuals exert themselves to a degree to make their businesses succeed. However, having a skilled accountant by your side can make sure to keep your financial reports meticulous. Thus, you must make sure that you are skilled enough to comprehend the common terms used in bookkeeping. 

Therefore, if you are a resident of San Jose, CA, you must make sure that you pursue proficient help from trusted bookkeeping services in San Jose, CA, so that you will be competent to apprehend the common terms used in bookkeeping and convey them to your accountant efficiently.

Index of common terms used in bookkeeping:

  • Assets

Assets is the most common term used in bookkeeping since assets are the future of your business and can provide benefits to your business plans. However, assets are valuable investments and buys that help you to take care of your business and handle further situations regarding financial conditions.

  • Liability 

Liability is a term that refers to the exact opposite of assets. Liabilities means the obligation owed to other firms, authorities, and investors. Liability includes loans, mortgage bills, tax obligations, accounts payable, and many more. Thus, these liabilities need to be paid on time without any holds.

  • Equity 

Equity is another representation that is used for the business owner’s claims. You must know that equity can be comprehended more distinctly as the totality remaining between assets and liabilities. This can be increased according to the profit gained and can be decreased according to the losses or the distribution among the business partners.

  • Revenue 

Revenue is nothing but income that your business receives in certain periods. Revenues are earned by the normal activity of your business or the sales of goods and services your company provides. However, do not mistake revenue for your profit since revenue is the checkpoint for resolving your profits.

  • Expenses 

Expense is none other than costs you have spent while maintaining the activities of your business. You must understand that expenses can help you maintain a clear record of the running costs of your business. Likewise, expenses include rent, utility bills, travel expenses, and many more.

  • Accounts payable

Accounts payable is the kind of capital that you owe to the suppliers for the goods supplied but not settled yet. Account payable is also considered a liability since it contributes to the future cash outflow.

  • Ledger 

When it comes to your financial documents, you must make sure that you have a ledger for managing your accounts. Thus, a ledger is a book where all your business transactions are documented, which helps resolve the debits and distinctions of your business.

These are the common terms used in bookkeeping; hence, make sure you are aware of them and consider hiring an accountant for your business.

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