There are many accounting terms that a business owner will eventually be required to understand. However, getting a firm grasp on the basics is a crucial first step.
Capital – Is the financial assets that a business needs in order to produce the goods and services it sells. Capital can be in the form of equity by offering stock, or debt, which could be a loan or credit line obtained from a bank.
Insolvency – A state where an individual or organisation can no longer meet financial obligations with lenders when their debts come due.
Equity – Is the owner’s stake in a business. Equity is measured by calculating the difference between assets and liabilities reported on your balance sheet.
If you would like any more in depth information on terms you’re not so familiar with, feel free to contact us and we would be more than happy to help!
