Basic Bookkeeping Terms Every Business Owner Needs to Know 

September 13, 2022

There is a lot of professional terms around finances, and they can be kind of daunting when trying to understand! We have created a list that is going to make knowing your numbers a breeze! 

Cash accounting accounts for business transactions on financial statements when the cash flows in or out of the business.​  

Accrual accountingrecognizes revenue when it is earned and expenses when they are incurred, regardless of when the money flows in or out of the business.  

Revenue: Any money earned by the business VS. Sales: Any money earned by the business 

Operating Expense: Any cost incurred by the business that goes towards the general operations of the business.  

Net Income: The net income of a business is calculated by taking the gross revenue less the cost of goods sold, all business-related expenses. 

Equity: Equity is the business's assets less the liabilities. 

Owner's Pay: Owner's Pay on the balance sheet is where all draws the owner takes in the form of checks, bank transfers, etc.  

Download our full glossary of terms here

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