Accounting For Dummies

Product Information

Cash is the most liquid asset and can easily convert into cash. Accounts receivable are amounts owed to the company by its customers. Inventory is any goods that a company has on hand that it plans to sell in the future. Prepaid expenses are expenses paid in advance, such as insurance premiums or rent. Long Term Assets The three key financial statements are the income statement, balance sheet, and statement of cash flows. All three record the same daily accounting transactions occurring in a business, but each presents the facts slightly differently. Financial accounting is commonly referred to as the “ language of business.” With an understanding of the fundamental concepts and principles of accounting, you can make more informed decisions, contribute to strategic conversations, and build and run businesses.

The government is mulling over whether or not to make regulation of accountants compulsory. With thaUsers of financial accounting information: The people or businesses that need to see the accounting transactions organized into financial statements to make educated decisions of their own—usually these decisions revolve around whether the user wants to invest in or loan a company money.

Equity sources of capital, the individuals and financial institutions including private equity firms who invest money in the business and expect the business to earn profit on the capital they have invested. Fixed assets (or Property, Plant, and Equipment): Amounts of costs invested in long-life, tangible, productive operating assetsInterest rate exposures – such as forecasted fixed-rate borrowing, variable-rate assets and liabilities, as well as fixed-rate assets and debt. SG&A expenses aren't included in COGS (since they're not associated with a specific product) and aren't assigned to your manufacturing costs. Even if you opt to use accounting software or hire a professional, use the tips we’ve reviewed in this guide to understand accounting basics. Your business will thank you.