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Business accounting, specifically, is analytics for the business world. This entails the use of business metrics for the goal of strengthening all aspects of your business – from the financial to the B2C (business to consumer) and legal portions. To use them properly, it behooves you to understand accounting basics. Let’s go through the gist of this in the following blog post.

Income Statement and Balance Sheet

Business accounting basics begin with the income statement and balance sheet; the former informs you of your company’s profitability. It is from here that you can start to usefully apply analytics – particularly if you’re losing more than you’re making since this is a situation that cannot be sustained.

Similarly, but more focused, is the balance sheet. On this form, you can see where your company is at a single point in time, and the profit at that point. By comparing different points, you can wean a lot of information.

Profit/Loss and Cash Flow Statements

The profit and loss form tells you directly how your finances are going as concerns any particular quarter or year (any period interval you choose, really – especially if you favor digital displays in your business accounting software). The numbers here will be important for tax considerations, as well.

The Cash Flow statement portion of your business accounting forms is especially helpful in determining which loan routes you take to help keep cash flow positive. This portion of your statements also lets you know where money is coming in and where money is going out.

Business Accounting: Bank Reconciliation

This portion of your business statements is all about certifying your records; the consistency contained inside is an amalgamation of bank records, business records, and expenditures. There will be information on debits and credits in this section.

There are quite a few more business terms of importance – but the above serves s a good introduction to business accounting basics. To learn more, reach out to the business and finance experts at Lode Capital.