When people think of bookkeeping they can become overwhelmed with the various terms. So in order to help our small business owners to navigate in this endeavor we are defining some of these basic terms that are commonly used.
- Cash – Cash is unlike other activities, this can be classified both as disbursements & receipts. Traditionally this account is where all the payments and checks are recorded when they are sent and received. Also the disbursements and receipts also typically relates to both receivables and payables.
- Receipts – Are account records of customer payments that a business may receive.
- Disbursements – These are records when payments are made to others.
- Accounts Receivable – This is the record that keeps tracks of all the invoices that you have sent to customers.
- Accounts Payable – This is the record that keeps track of the payments that your business made in both past and what you plan to make in the future.
- Sales – Tracks any and all incoming revenue that one’s business may be receiving, even if payment is not due when done.
- Inventory – Is the dollar amount of the products that you have in stock that may have not been sold yet. Service businesses usually don’t carry inventory but they will have sales.
- Purchases – Traditional cost of goods that owners utilize to make the final products. Service businesses usually don’t have purchases but they will have sales.
- Payroll – Track employee wages, commission, taxes, and any other salary information.
- Owner’s Equity – These records are used to keep an eye on the funds that were initially invested by owners into the business.
- Retained Earnings – Keep track of the profits that are reinvested back into one’s business.
For additional information about bookkeeping please come back and visit our blog. However if you need help with your bookkeeping then give us a call at 469-583-4901 or contact us via the contact form located on this page.