Prior you opt for taking up
services for bookkeeping in Salisbury,
MD, it is mandatory that you understand the basic accounts of the company –
assets, liabilities, and equity.
Ø Assets – These are the things that the
firm owns like its inventory and accounts receivables.
Ø Liabilities – These are the things that
the firm owes like what they owe to its mortgages, business loans and banks,
suppliers (accounts payable), and any additional debt on the books.
Ø Equity – It is the ownership that the
firm owner and any shareholders have in the company.
Balancing the Books
With the intention of balancing
the books, you can rely on Affordable Bookkeeping services that can ensure careful tracking of such items and be
certain the transactions that handle equity, liabilities, and assets are
recorded appropriately and in the correct place. “Assets = Liabilities +
Equity” is an equation for accounting, which is a promising formula that the
experts count on to ensure the books always balance.
This equation signifies that
every asset of the firm is balanced against claims against the firm (equity and
liabilities). Liabilities are claimed depending on what you owe lenders and
vendors. Company owners have claims against the remaining assets (equity).
Initial Bookkeeping Terms Associated With Accounting Equation
When you hire an expert for Tax Preparation Services in Salisbury MD,
one will make you aware of equity, liabilities, and assets so you’ll have a thorough
understanding of what comprises each one.
Ø Liabilities – Both long-term and
current liabilities are incorporated in the liability accounts on a balance
sheet. Current liabilities are typically accruals and payable accounts.
Accruals will be composed of taxes owed such as Medicare tax on the employees
that are usually paid quarterly, and sales tax owed and federal, state, social
security. Accounts payable are typically what the business owes to its bank
loans, credit cards, and suppliers.
Ø Assets – If you take a look at the
format of a balance sheet, you’ll notice the equity, liability, and asset
accounts. Asset accounts typically begin with the cash account and the
marketable securities account. Then, inventory accounts receivable, and fixed
assets like buildings, land, and equipment and plant are listed. These are
substantial assets that you can really touch. Firms even have insubstantial
assets like goodwill of customers.
Ø Equity – The equity accounts consist of
the entire claims the owners have against the firm. Evidently, the owner of the
firm has an investment, and it may be the sole investment in the company. If
the company has taken on additional investment, which is considered here also.
So, hiring a veteran for bookkeeping in Salisbury MD will help
you understand the entire basics!