Page 80 - MICROHUB Handbook - ENGLISH
P. 80
THE BASICS
OF ACCOUNTING AND FINANCIAL TERMS
Even when a company uses outsourced bookkeeping, a CEO still needs
to be knowledgeable about all facets of successfully running a business
because not everyone has the opportunity to study accounting. When
phrases that we use in daily transactions have distinct meanings in a
financial environment, the language of accounting can at first seem
confusing. You can talk about and manage money with confidence if you
are familiar with basic terminology. This section aims to introduce some
basic terms of accounting and finances that will help entrepreneurs
better manage the finances of their business.
Term Definition
The procedure for monitoring and planning financial activity. You
are keeping track of each transaction, or monetary event, that
Accounting
takes place. Data and reports generated by accurate accounting
can be used to create well-informed corporate decisions.
A record that compiles related types of transactions, such as
Accounts liabilities or assets. Financial accounts can be divided into five
categories: assets, liabilities, equity, revenue, and expenses.
Benefits to the economy now or in the future that an entity
controls. This could be something tangible, like money, tools, or
Assets
real estate, or something intangible, like copyrights, patents, or
brands.
What you owe; the sum of money or other financial
responsibilities that an organisation owes to another party. This
Liabilities
covers money owed and unpaid services. Liability accounts are
often those that finish in "payable."
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