Account Terms, Starting From B and Moving Into C
You've decided to dive off the deep end and manage your business' accounting on your own. Congratulations! Of course, to survive the long and harrowing journey ahead (which could be avoided entirely by reaching out to a professional team of accountants such as our own), you'll need to arm yourself with a basic understanding of accounting terms, and that's something that we can help you with.
Ba Ba Balance Sheet
At any given moment, you need to have an accurate understanding of what the financial state of your company looks like. It needs to be able to encompass everything, from your liabilities, to your assets, to your shareholders' equity, and everything in between. To create such a snapshot, you use a balance sheet.
They Don't Call It Capitalism For Nothing
Your capital is simply the financial assets available to an individual or organisation, and that might mean anything from funds in your deposit account or as they are made available to you from the source of your finances. To get more specific, your working capital, which is another indicator of the financial health of your business, refers to the liquid capital you have available to pay your day-to-day expenses. Might want to make sure you have enough of this lying around.
Cash Basis Accounting – It's Almost Like Accrual Basis Accounting, But Not At All
Where accrual basis accounting is entirely focused on expenses and revenues that still might be, cash basis accounting is instead dedicated entirely to what currently is. This accounting method doesn't record a single transaction until cash exchanges hands, helping keep your books simplified.
You've Got To Follow The Money
The cash flow of your business is the way in which cash moves through your organisation. This is used to measure your total expenses, your total revenues, and the ways they interact, which can help determine when and how you need to account for future expenses or adjust your current stock levels. Overall, it's incredibly useful to have an understanding of how cash is flowing through your business.
Bureaucracy Has Never Been More Alive
If you've ever wondered how business keep track of their expenses, the answer is things like your accounts payable, your accounts receivable, and your balance sheet. If that isn't good enough for you, then you might find a chart of accounts more to your liking, providing an additional overview of the general ledger for your business in a specific accounting period. Generally speaking, this document is incredibly useful for investors and stakeholders.
It May Be Time To Reach Out To Someone Who Is In The Know
Managing all of this on your own isn't easy. Instead of trying to do that, you might want to think about contacting an accounting professional to do it all for you. Fortunately, the M.A.S Partners have years of experience providing accounting for small businesses, and we're more than happy to help you manage your accounts. To speak with our team of small business accountants in Sydney about what we can do for you, call us on (02) 9211 5000.