Cash: An accrual accounting method is counting your income when the work is performed.Ĭash: a cash accounting method is counting your income when the money is received. So what does this mean exactly:Īccrual VS. Perhaps you have noticed in your accounting software that there are multiple ways to look at your overall sales. If you buy something, where does that money come from, and where does it end up? All of this is recorded in your “accounts.” The easiest way to explain this is with an expense. ![]() You can track different types of spending in these accounts, but they are also used to show anyway your money is used or stored.Įssentially, whenever you do something financially with your business, there is a money trail that needs to be recorded. Most software will have what is called a chart of accounts that shows this information. You might only look at your income, but you have to consider all these “accounts” to get a FULL financial picture. Plus, the good news is that if you forget what something means, you can always come back to our cheat sheet and look it up later on.Įvery business has different “accounts” that your business’s finances are categorized into-categories like assets, liabilities, equity, revenue, and expenses. We are guessing if you are reading this that you aren’t “in the know” when it comes to accounting, but we promise we will make this post as painless as possible. Since we get lots of bookkeeping questions from self-employed individuals at Rochon & Associates, we wanted to provide you with some of the basic accounting principles in an easy-to-understand manner – no accounting degree required. Wouldn’t it be great if there was some kind of accounting cheat sheet for business owners that made accounting basics simple? Well, look no further.
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