Financial Terms 101 for Small Business Owners, Part 2

October 1, 2019 by OSYB Staff

So you have your own business and you have consulted or hired financial professionals to manage your business accounting. That’s great but it is always important for you to have some basic understanding of your company’s financial picture at all times. Intuit QuickBooks shares a glossary of terms that small business owners should be well-acquainted with. Here is part 2 of the terms you should be familiar with:

• Cash flow covers the movement of funds through the company, such as payment for good and services, and funds paid out by the company for expenses, such as payment for rental space.
• Cash flow statement is a document that shows the entry and exit of money into a business during a specific time period. It shows whether a company can pay its bills (solvent) or not pay them (insolvent).
• Profit and loss means that to be successful the company must make more money selling the product or service than it takes to make or supply it.
• An Income Statement documents the profits and losses that occur during a specific period, usually a quarter or a full calendar year. An income statement can be used to analyze company profitability.
• Net profit is also known as the bottom line as it appears in the last line of the income statement. It is the final total of what has been earned or lost during an accounting period like a month.

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For full article: What are assets? Ten financial terms for small business owners

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