8 Key Bookkeeping Terms- a foundation for your financial understanding.

Before you dive into bookkeeping, it’s important to familiarize yourself with a few key terms. These will make managing your financial records much easier:

• Assets, Liabilities, and Equity:

• Assets are everything your business owns, such as cash, inventory, or equipment.

• Liabilities represent what your business owes, like loans or unpaid bills.

• Equity is the difference between your assets and liabilities, essentially showing your business’s value.

• Revenue and Expenses:

• Revenue is the income your business generates from selling products or services.

• Expenses are the costs you incur to run your business, like rent, utilities, and salaries.

• Debits and Credits:
  In the world of bookkeeping, debits and credits help keep financial records balanced. The double-entry system ensures every transaction is recorded in two places: one account is debited, and another is credited.

• Chart of Accounts:
  This is your business’s financial filing system. The chart of accounts organizes all financial transactions into categories like assets, liabilities, income, and expenses. A well-structured chart helps you easily identify where money is coming in and going out.