For those who have certain studies or a course in accounting this could be very easy. But certainly, some entrepreneurs may have some gaps regarding general accounting principles. While as entrepreneurs have to suffer with sales, customer service, care of products or service, and more things that may arise, accounting is also an issue that can cause many headaches.
Here is an infographic with some description of accounting, but also I will try to relate as much as possible with daily life situations for an entrepreneur. Knowing the general accounting principles will allow to understand a little bit more the accountant, if you have one, or at least to understand more about this area.
Infographic Accounting Cheat Sheet
General accounting principles from theory to real life
And the question is, are those terms applied in real life? In the life of a mortal, probably no, but in the day by day of a business, of course. Every business operation gives life to accounting. Obviously, if you’re an accountant you must know thoroughly the accounting rules in your country.
As I mentioned, probably a few entrepreneurs know the terms. And actually I only have said “I need my current and long-term liabilities” to the bookkeeper, but no one else. I want to notice that those principles are important for accounting and general business, regardless of whether if you are an accountant and especially if you’re an entrepreneur. Why? Because you need it to know how to read your business status.
When we are talking about our health, we probably go with the doctor for regular check in a year to be analyzed. The same should happen with business. Large companies do it, they constantly analyze their numbers, especially if listed in stock markets. As small business entrepreneurs, we also have to know how to read financial statements to determine the health of our business. As like as you worry about how much cholesterol is within you, the same should be done to see how much liabilities is having your company.