Whether you do your books yourself or outsource it, there are many bookkeeping terms you should be familiar with. To help out, here is the business bookkeeper top 10 industry terms.

1. Balance sheet

This financial statement shows all your business’s financial status on assets, liabilities, equity, and any other relevant data for a selected date in time. It can be monthly, quarterly, yearly, etc. One of its main purposes is to show your income versus expenditures, sometimes called the bottom line. As a bookkeeper, our job is to ensure your total assets are equal to your total liability as well as the equity. This is called a “balanced book.” We can also make professional suggestions when these numbers do not add up correctly.

2. Liabilities

This is all the debt your business owes. This can be anything from property, taxes, cars, loans, bonds, and any unpaid bills.

3. Assets

This term refers to all the things you own in order to run your business. This includes property, cash, land, tools, equipment, vehicles, inventory, and furniture.

4. Equity

This refers to all investments in the business. A business owned by a person or a group of people will show in a Capital account. Larger business are separated into shares of stock proportional to each owner’s percentage of the business.

Did you know? Approximately 74% of business owners feel lost when it comes to finances? Source: LinkedIn

5. Accounts Payable

All the outstanding bills by you to those such as workers, contractors, vendors, consultants, and other professionals you work with.

6. Accounts Receivable

All your sales and income due to sale of goods, services, and any other payment due.

7. Retained Earnings

All your business profits that you reinvest in the business instead of paying out to the owner or owners.

Did you know? Approximately 82% of small businesses will fail due to cash flow, aka bad bookkeeping. Source: SVB

8. Accounting Period

A selected time that your business itemizes income and expenses. As stated above, these times can be monthly, quarterly, and yearly. However, some businesses can have an accounting period for a week, day, or even a set time of day that is relevant.

9. Trial Balance

The procedure to ensure your business books are balanced before creating the financial reports, balance sheet, and others before finalizing the books for your chosen accounting period.

10. General Ledger

This is where you regularly keep all your numbers. In the olden days it used to be an old-timey bound book. However, these days most people use an online tool, app, and/or software to manage the general ledger.

More on Business Bookkeeper in Houston

Do you own a business in Houston and want help with any of the above terms and principles? Contact B&J Bookkeeping to schedule an appointment to see how we can help you.