(Not-So-Fun Home Business Record -Keeping Terms Explained)
http://www.wcgem.com
About the Author:
—————————————————————–
To find the best home based business ideas and
opportunities so you can work at home visit:
http://www.wcgem.com
There are always aspects of running a home business that may not be pleasant to do but are necessary. Recording-keeping is a very important aspect of running a business that cannot be ignored.
You may be able to outsource your accounting needs to a professional. However, even if you do hire someone to complete that more unpleasant aspect of running a business it is advantageous to you to understand some record-keeping terms used by accountants.
If anything, it will help you know better how to read annual reports and to understand components of prepared business plans. When reviewing or preparing home business reports you may notice they include one or more of the following statistical terms:
* Cashflow-This is usually defined as simply the amount of revenue received by a company within a certain time. Usually this represents the amount of money made within a quarter, a year, two years, or five years.
Calculations of this revenue are usually determined as measured against expenses paid during this same period. However, sometimes this revenue is measured as a calculation of the gross income that an operation earns from one or more sources.
* Profit-An alternative form of this word called “profitability” relates to this aspect of record-keeping. Usually this is the net amount that a business has earned after expenses are subtracted from the amount of cash flow received within a certain time.
* Matching-This is a more advanced accounting term which relates to the way your business profit will be accrued. It is one factor that determines when certain expenses for your business will be deducted from the amount of business taxes owed by you.
* Debits-Record keepers usually use this term when recording expenditures. This term is used to keep track of any business-related purchases. It is the act of taking money from your account to be used for operation expenses such as supplies, bills, or outsourced services. An alternative phrase used for this column is “payments sent.”
* Credits-These are individual entries of payments kept track of in your revenue records. These are the payments you receive for products or services offered to clients. This is the column in your accounting record book that is used for calculating quarterly or yearly income earned. It is not to be confused with credits given to clients, which usually is listed in your “debits” entries. Another way to say “credits” is “payments received.”
* Assets-This applies to capital and other resources of value that your company owns. Your commercial property, company car, computer, or cash account are considered value resources.
* Liabilities-Usually this term applies to the amount of money that you owe to clients, creditors, or other firms. It is the money you are required to pay out sometime in the near future. This aspect of accounting is want counts against your liabilities to determine your net worth.
* Equity-The calculated difference between an owner’s liabilities and assets is usually described using this term. This is another aspect of determining the net worth of your entire operation. It is part of what is used to appraise in the case you want to sell.
Other terms apply as well, such as income and expenses. These are often used when designing a company budget. If you have any questions about any aspect of record keeping your best source of help is professional accountants.
"A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing."...George Bernard Shaw
Want to be coached and guided by a successful team of Plug-in-Profit Site members?
Http://IHQ4QKIK.pipspower.hop.clickbank.net
WaltGemmell
Http://www.wcgem.com/pips.html
http://www.wcgem.com
About the Author:
—————————————————————–
To find the best home based business ideas and
opportunities so you can work at home visit:
http://www.wcgem.com
There are always aspects of running a home business that may not be pleasant to do but are necessary. Recording-keeping is a very important aspect of running a business that cannot be ignored.
You may be able to outsource your accounting needs to a professional. However, even if you do hire someone to complete that more unpleasant aspect of running a business it is advantageous to you to understand some record-keeping terms used by accountants.
If anything, it will help you know better how to read annual reports and to understand components of prepared business plans. When reviewing or preparing home business reports you may notice they include one or more of the following statistical terms:
* Cashflow-This is usually defined as simply the amount of revenue received by a company within a certain time. Usually this represents the amount of money made within a quarter, a year, two years, or five years.
Calculations of this revenue are usually determined as measured against expenses paid during this same period. However, sometimes this revenue is measured as a calculation of the gross income that an operation earns from one or more sources.
* Profit-An alternative form of this word called “profitability” relates to this aspect of record-keeping. Usually this is the net amount that a business has earned after expenses are subtracted from the amount of cash flow received within a certain time.
* Matching-This is a more advanced accounting term which relates to the way your business profit will be accrued. It is one factor that determines when certain expenses for your business will be deducted from the amount of business taxes owed by you.
* Debits-Record keepers usually use this term when recording expenditures. This term is used to keep track of any business-related purchases. It is the act of taking money from your account to be used for operation expenses such as supplies, bills, or outsourced services. An alternative phrase used for this column is “payments sent.”
* Credits-These are individual entries of payments kept track of in your revenue records. These are the payments you receive for products or services offered to clients. This is the column in your accounting record book that is used for calculating quarterly or yearly income earned. It is not to be confused with credits given to clients, which usually is listed in your “debits” entries. Another way to say “credits” is “payments received.”
* Assets-This applies to capital and other resources of value that your company owns. Your commercial property, company car, computer, or cash account are considered value resources.
* Liabilities-Usually this term applies to the amount of money that you owe to clients, creditors, or other firms. It is the money you are required to pay out sometime in the near future. This aspect of accounting is want counts against your liabilities to determine your net worth.
* Equity-The calculated difference between an owner’s liabilities and assets is usually described using this term. This is another aspect of determining the net worth of your entire operation. It is part of what is used to appraise in the case you want to sell.
Other terms apply as well, such as income and expenses. These are often used when designing a company budget. If you have any questions about any aspect of record keeping your best source of help is professional accountants.
"A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing."...George Bernard Shaw
Want to be coached and guided by a successful team of Plug-in-Profit Site members?
Http://IHQ4QKIK.pipspower.hop.clickbank.net
WaltGemmell
Http://www.wcgem.com/pips.html
posted by Walt Gemmell at 12:37 PM
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