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To manage the financial records of your company in London, you will need to hire an accountant. But before you hire him or her, if you know some basic accountancy terms, you can easily understand how the professional will work. Moreover, during a discussion regarding financial record management, you will not feel left out if you learn the terms.
Though your accountant will walk you through all of the terms, it’s better to know at least some of them for your own good.
Assets
The meaning of this term is nothing but the resource that you own or control as a business. Basically, assets can be termed as that which benefits your business and increases its value.
A closely related term is ‘asset-management where your accounting services provider will keep a track of the resources and document how they are performing. Here, when and if a certain portion of your business does not contribute to the overall growth, it is called a ‘non-performing asset’.
Balance Sheet
As a business, you will not only have assets but also liabilities and equity, and the financial statement of all of these are represented in what is termed as the ‘balance sheet’.
By referring to this sheet you will get to know the balance of your businesses’ income and expenditure over a certain period.
Accounts Payable and Receivable
When your accountant mentions the term ‘accounts payable’, it means the money that you as a business owe to suppliers and vendors of services and goods. So, this is a liability that your business holds and is reflected in the liability section of the balance sheet.
On the other hand, the ‘accounts receivable’ is the term for the money that you have been owed to you as a business by your customers or other businesses.
Capital
Capital is mostly the financial assets of your business. You will need this to grow your business and pay what you owe. But to manage it properly, you will need to hire a company that provides reliable bookkeeping services in London. Otherwise, expanding your brand might become difficult.
Cash Flow
The flow of cash is the amount of cash that your business is yet to receive or have to pay. And to get the sum of all money, your accountant will present to you the ‘net cash flow’.
This is basically a statement that of the cash that you have generated through your business operations.
Credit and Debit
The meaning of this term is simple. Whatever increases your businesses liability account and decreases the asset account can be termed as ‘credit’.
Debit, on the other hand, is that which increases the asset and decreases the liability account of your company. The accountant in London whom you have hired will help you to manage the debit and credit so that both stay equal to maintain the balance.
So, these are a few basic terms that will help you get going with your business as well as the accounts. But when you hire a professional, he or she will use many more terms and will let you know what they mean.
Hire a Trustworthy Tax Advisor Today
If you want a reliable tax advisor in London to help you manage your business, get in touch with Dynamic Project Advisory Ltd as we are an experienced group of professionals providing financial consultancy. So, to talk to our bookkeepers or advisors or to get a quote, call us now.