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Financial Terms for Business Owners

Updated: Apr 9


Knowing common financial terms is the first step in understanding your record books and running your small business.

At some point you will be faced with financial concerns regarding your small business. Investors, partners, accountants and bookkeepers, and auditors will use basic financial terms that are important to know. Learning this new language will make it that much easier for you to plan, understand and ultimately, communicate your business’s goals with financial professionals.


Enjoy a greater perspective on the financial health of your business:


FINANCIAL STATEMENT

A compilation of 4 main reports of the business

• Income statement (Profit & Loss)

• Balance sheet

• Statement of cash flow

• Statement of shareholders’ (owner) equity.


INCOME STATEMENT A statement of income and expenses generated by the business over a specified period


BALANCE SHEET

A summary of business’ assets and liabilities


CASH FLOW STATEMENT

The amount that flows through a business over a specified period of time.


ACCOUNTS PAYABLE

What you owe to vendors, suppliers, and creditors


ACCOUNTS RECIEVABLE

What customers who owe you


ASSET

Anything owned by the business that has a value


LIABILITY

A legal obligation to repay a debt (Loans, taxes, accounts payable)


RETAINED EARNINGS

Profits that a business has earned, that are retained in the business.



ProStrata-G would like to answer your complicated bookkeeping questions. If your small business has been struggling to find answers for your unique business structure, leave a brief comment below. If we are able to help address your small business concern, we’d like to feature your story in our next article.

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