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The 6 essential accounting terms for small businesses, by your small business accountants in Sydney

Small business owners need to master the arts of almost any profession within their business when they first start up. Yet all owners should understand and know of these 6 accounting terms that our small business accountants in Sydney will delve into.

The 6 essential small business accounting terms you should be aware of are:

1. Cash flow – talks about all the money in your business and where it’s going, either in or out of the business. Determining your cash flow will allow for you to see your small business’ ability to pay back debt
2. Profit and Loss Statement – it is used to determine the profitability of your business, which states your revenue and gains as well as your losses and expenses over a specific period of time
3. Gross and Net Profit – your gross profit is what remains when you subtract the cost of goods sold from your revenue, while on the other hand, Net Profit determines your exact profit of sales after subtracting all expenses
4. Balance Sheet – offers a snapshot of your overall financial position and lists your assets, liabilities and shareholder capital
5. Accounts Receivable and Accounts Payable – to put it simply, your accounts receivable is money owed by your customers for good and services, while accounts payable is money you owe to suppliers and any other bills you need to pay
6. Bad Debt – are debts from your customers that may never be paid off, so they get registered as a bad debt on your balance sheet and will eventually be written off as a loss

There you have it, 6 essential accounting terms for your business. If you get stuck with anything while starting out your small business, be sure to contact our business accountants in Sydney and let’s get your business kick-started together.

Our small business accountants in Sydney are experts in their industry and can help your business reach new heights.

 
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