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An income statement (also known as a profit and loss statement) summaries a business’s revenues, expenses, and net profit during a specific accounting timeframe. It is one of the three core financial statements that capture a company’s overall financial performance.
A balance sheet is a statement summarizing the financial health of a business at a given point in time. It includes information like assets, liabilities, and net worth. It is one of the three core financial statements that capture a company’s overall financial performance.
A statement that details the actual or anticipated amount of cash (and cash equivalents) entering and leaving a business during a specific accounting timeframe. It summaries where the money came from and went. It is one of the three core financial statements that capture a company’s overall financial performance.
Accrual Accounting is one of the two primary accounting methods. When using this method, a business records revenues and expenses when they are incurred, regardless of when money is actually exchanged. This method can allow for better financial forecasting but requires careful monitoring of cash flow.
Cash Basis Accounting is one of the two primary accounting methods. When using this method, a business records revenues and expenses at the time when the money is exchanged, not before. Certain types of business entities are prohibited from using Cash Basis Accounting, including C Corporations and certain types of trusts.
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