4 Confusing Accounting Terms and What They Mean
If you're a small business owner, it's likely that accounting terms can be confusing and difficult to understand. Whether you're trying to keep track of your finances or working with a certified accountant, there are a few key terms that you should know.
In this blog post, our team at HHA Accounting is here to explore four accounting terms that are commonly misunderstood and what they mean. If you live in southeastern Wisconsin and northern Illinois, contact us today to get a quote for accounting services!
Certified Public Accountant (CPA)
A certified public accountant, or CPA, is a professional accountant who has passed the CPA exam and fulfilled the educational and work experience requirements set forth by their state's board of accountancy. This designation ensures that the accountant has the necessary skills and knowledge to provide accounting services to the public.
Accrual Basis Accounting
Accrual basis accounting is a method of accounting that recognizes revenue and expenses when they are earned or incurred, regardless of when payment is received or made. This method is commonly used by businesses to provide a more accurate picture of their financial situation, as it takes into account money that may be owed or due in the future.
Depreciation
Depreciation is a method of accounting for the decrease in the value of an asset over time. This term is often used when referring to the loss of value of physical assets such as buildings, equipment, or vehicles. By accounting for depreciation, businesses can more accurately report the value of their assets on their balance sheet.
Profit and Loss Statement
A profit and loss statement, also known as an income statement, is a financial statement that shows a company's revenues, expenses, and net income or loss over a specific period of time. This statement is used by businesses to track their financial performance and identify areas for improvement.
Book a Free Consultation With Our Certified Public Accountant
Understanding accounting terms can be challenging, but it's essential for small business owners to have a basic knowledge of these concepts to make informed decisions about their business.
Not only does HHA Accounting serve business owners in southeastern Wisconsin and northern Illinois, but our CPAs specialize in the home health and community-based agency field. Book a free consultation to get started!