As a business owner, it might feel like you are juggling everything, all of the time. This might be true, but there are some things that you simply must have a grasp on and these are the three components that are used to make up the accounting equation. We are talking about assets, liabilities and equity. If you don’t have a good grasp on these components in your business, it’s time that you get acquainted. Mark Dicus & Company is here to explain what these components are and why they are so important.
Know What Assets, Liabilities & Equity Is
As mentioned above, there are a few components to running a successful business that all business owners should be acquainted with, assets, liabilities and equity. We are here to talk about each one so that you know why they are so important.
– Assets: The assets your company has are the things that can attribute a positive dollar amount. This might look like inventory you have on hand, cash, patents, investments, accounts receivable and more. While it might be tricky to come up with a dollar amount to all of your assets, there are different calculators that you can look up to help you come up with a value.
– Liabilities: All businesses have financial obligations that they are responsible for. That is simply part of doing business. These financial obligations are known as liabilities. They might include things like loans, accounts payable, notes and bonds payable, taxes, equipment financing, leases, mortgages and more.
– Equity: This is the owner’s value in the company. If the company were to go bankrupt tomorrow, the equity of the company would be the money that is left over after the liabilities have been paid and the leftovers are distributed between owners. This would be their equity.
Importance of the Accounting Equation
If you are unfamiliar with accounting, there is an accounting equation that can be extremely helpful when you are making financial decisions for your company. In the accounting equation, assets are equal to liabilities plus equity. For instance, if you are wanting to take out a new loan for your business, you would need to see if this new liability would be balanced out in your company’s overall budget. This is vital to your success as a business.
Bookkeepers, Accountants & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
Owning and running a business is difficult, and keeping the books balanced might seem like a part-time job in and of itself. This is why so many business owners turn over the task to Mark Dicus & Company. We will take care of your bookkeeping needs so that you have the capacity to focus on other areas of your business. We will ensure you have all the information required to make sound, financial decisions for the future of your company. It is our goal to help you find success. Call us today!