Essential Accounting Terms You Need to Know

Running a business involves juggling numerous tasks. But among these, managing your financial operations and understanding the basics of business accounting arguably takes the cake. Here’s a handy guide to some essential accounting terms and how QuickBooks Online Asset Management can help simplify your accounting tasks.

Accounting Terms

Accounts Receivable: This term refers to the money that the company’s customers owe it. For example, if a business sells products or services on credit, the amount owed by customers becomes the business’s accounts receivable.

Accounts Payable: In contrast to accounts receivable, accounts payable is the amount your business owes to its suppliers or vendors for goods or services purchased on credit.

Balance Sheet: A balance sheet is an essential financial statement showing a company’s financial condition at a specific moment. It embodies the equation Assets = Liabilities + Equity. Assets are what your business possesses, liabilities are what it owes, and equity is the difference, representing the business’s net worth or capital.

Cash Flow: Cash flow stands for the inflow and outflow of cash in the business. Positive cash flow indicates that a company’s cash reserves are increasing, which could be due to sales, new equity, or borrowed funds. Negative cash flow implies that a company’s liquid assets are decreasing.

Depreciation: Depreciation spells the reduction in value of a tangible fixed asset over its expected lifespan due to wear and tear, age, or obsolescence.

Income Statement: An income statement illustrates a company’s performance over a specific period. It outlines a company’s revenues, costs, expenses, and net income or net loss (the resulting profitability of the business).

Bringing it All Together with QuickBooks Online Asset Management

With all these terms that play significant roles in your business’s financial health, having a reliable tool to manage all your financial operations becomes essential. This is where QuickBooks comes into play. Not only does QuickBooks help you manage your day-to-day accounting tasks; it also offers features like QuickBooks Online Asset Management.

The feature simplifies tracking and managing a business’s assets. It offers visibility into the value of your assets and calculates depreciation automatically. With QuickBooks Online asset management, you can manage your assets, track their value and adjustments, and get comprehensive reports about your assets in real-time. This feature helps you make informed decisions about asset use and plan for future purchases or investments.

Whether you run a small or large firm, understanding these accounting terms and using a tool like QuickBooks can streamline your financial management and make your business more effective and profitable. Take advantage of the QuickBooks Online Asset Management feature and maximize its full potential for your enterprise’s benefit.

Regardless of your business’s nature, understanding these accounting terms is fundamental. And when you bring them together with QuickBooks features, you get a powerful duo that will make your finance management more accurate and efficient. So, brush up on these terms and start upgrading your business’s financial operations today.