Most business owners rely on their accountants to do all accounting tasks for them –that’s what accountants are paid for anyway. Although these guys get the job done for you, this does not necessarily mean you shouldn’t know about the basics of accounting. In fact, having basic knowledge about how accounting works would make your life easier and give you some rough ideas on whatever that’s going on in your company.
One of the first few things you should have clear understanding about is the definition of net income. Net income is basically the final total amount that you earn from your business –the remaning amount after all business expenses have been substracted from your earnings.
Imagine opening a restaurant and having to buy all kinds of food ingredients, pay for all kinds of bills, rental, and many more. The earnings you make will then be deducted upon paying all your expenses. The final amount after expenses are substracted is your net income.
Asset is another important term you as a business owner should know. When you think of assest, you think of something big, long-lasting, and expensive. Cars, furniture, and digital equipments are examples of the common types of asset in a business.
Liability emphasizes on the obligation that a company should hold especially when dealing with business transactions. It is always associated to a monetary value and when a business is liable to a transaction for example, it is its responsibility to repay the amount it is liable to somehow in the future.
Learn more about accounting and how things work by reading our future post. Should you need accounting software to start or to help the growth of your business, feel free to visit our website at www.qne.com.my