Revenue/income: Revenue, also called income, is simply any monies earned by your business either through products sold or services rendered.Liabilities: Any debts owed by your business are considered liabilities, such as your accounts payable (A/P) balance, (since that is what’s owed to vendors), as well as any loans the business owes.This includes cash in your bank accounts, your accounts receivable (A/R), balance (since that is money owed to you by customers), as well as inventory, computers, and furniture. Assets: Anything of value in your business is considered an asset.There are five bookkeeping accounts you should know and understand: Bookkeeping basics: The accounts you should know A bookkeeper records all of the financial transactions for a business, while an accountant’s job is to interpret and analyze the data recorded by the bookkeeper. While the job of bookkeeper may appear similar (or the same) as an accountant, they are only similar on the surface. However, for the novice, the introduction of bookkeeping-specific vocabulary and the rules that govern proper bookkeeping processes can be overwhelming. Any transaction with financial implications needs to be recorded by a bookkeeper. Simply put, bookkeeping is the recording of a business’s financial transactions. Close the month and run financial statements.Begin to record all of your financial transactions.Become familiar with and set up your chart of accounts.Here are the bookkeeping basics you should know: This guide is designed to simplify the bookkeeping process for you, providing you with the basics from proper setup of all of your accounts to why it’s important to record transactions promptly. In this guide, The Ascent breaks down the basics to help you get a firm grip on those terms. It can often be difficult to keep the different terms involved in small business bookkeeping straight.
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