Basic Accounting Terms

The field of accounting can be tricky to navigate. We at Perfect Balance Books aim to make that easier for you. Below are some basic accounting terms which will help you understand the process.

Revenue – Revenue is also known as sales or income and is the total income amount received at a point in time. In other words, this is your sale price multiplied by the number of units sold. This is before any expenses are taken out.

Assets – An Asset is any resource a company owns that has economic value, which a company expects to continue to provide benefits in the future. Some can improve sales, reduce expenses, or generate cash flow. Some types of assets include current, fixed, liquid and prepaid expenses. Assets can range from equipment to buildings.

Balance Sheet – A Balance Sheet is the record of your assets, liabilities, and stock-holder equity/capital at a specified point in time. This can be monthly, quarterly, or even yearly. This is used to figure out how financially healthy your business is.

Accounts Payable – Accounts Payable is the money a business or enterprise owes to any of its vendors, creditors, or suppliers for any services or goods, which were bought via credit. This is seen as a liability on your balance sheet, and should be resolved quickly to avoid defaulting.

Our team at Perfect Balance Books are more than happy to help you learn more about these and other terms. Perfect Balance Accounting is committed to providing excellent accounting, payroll, and tax preparation services for our business, nonprofit, and personal clients in the Racine, Kenosha, and Southeastern Wisconsin areas.