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As they say, knowledge is power, so it only makes sense that the more you know, the more powerful you become! Bring that knowledge and power over to your books, even if you’re not the one working on them every day. We’ve compiled some accounting and bookkeeping terms that are commonly used but may not be commonly known. You should know what your books and your accountant are telling you, and that starts with breaking down some of the key terms. If you run into a term you’re unfamiliar with, always ask your accountant.
A/P includes all of the expenses that a business has incurred but not yet paid. This is recorded as a liability on your Balance Sheet, since it’s a debt owned by the company.
If you’re just starting to navigate your books, you may be unsure of some of the lingo. It’s like a different language for those outside of the accounting world, but the more you work with your books, the quicker you’ll catch on. What’s important is to think of everything in terms of your business; these terms provide you with vital information about your company’s standing. Let’s go over some common terms you’ll frequently hear and need to use in order to discuss and understand your books.
Whether you run your own business or just work on the books, it’s imperative to know all the lingo. When you work on your books, these factors will tell you quite a bit about your business’s financial health. We know there seem to be an infinite number of terms in the accounting and bookkeeping world. It’s almost like a different language!
Have you ever left a conversation with your accountant with nothing but confusion, asking yourself “What did they just say?” You’re not alone. We’re here to bridge the gap between accountant and client. Here is a list of common terms you will likely here from your accountant, if you haven’t already, and what they actually mean:
Accounts Payable (A/P): Money you owe to others.
Accounts Receivable (A/R): Money others owe to you.
Asset: Items of value owned by a business. This includes money in your bank, A/R, equipment, vehicles, buildings, and so on.
Bad Debt: Uncollectible A/R.
Balance Sheet: A list of company assets, liabilities and equities for the company.