Ever look at a financial statement and throw your hands up exclaiming, “What do all these numbers mean?” After all, you’re a small business owner, not an accountant. Yet it’s those numbers that help you keep score, financially speaking. Here’s an explanation of some basic accounting terms to help you get started.
Accounting practices give you the tools to determine the financial health of your business. The payoff is that it helps you make more informed decisions. It answers questions like, “Am I making a profit?” It also gives you a way to communicate with investors, creditors and Uncle Sam about how you’re doing.
These are five commonly used accounting concepts:
Want to learn more? The Small Business Administration offers a free online class, Introduction to Accounting, which is designed to provide a broad overview of accounting.