Accounts payable refers to the amount that a company owes in order to purchase goods and services on credit from a vendor or a supplier. It acts as a liability. Accounts receivable refers to the amount that has to be collected by a company due to the selling of goods or services on credit. It acts as an asset to the company.

There are some ways that can help you in maintaining accounting accuracy. Let’s take a look: You need to identify revenue streams to maintain accounting accuracy. You need to keep a track of invoices and receipts Preparing tax returns is a good way to avoid penalties Preparing financial statements is another way to maintain accounting accuracy. You should always keep an eye on the deductible expenses.

It refers to the capital that is used in day-to-day trading. It is calculated by subtracting current liabilities from current assets. Working capital helps in calculating the resources that a company can count on to carry out its operations for the short term.

Here are some common accounting terms that you should be aware of: Cost of goods sold (COGS)-It refers to the cost that is spent on producing a product. It plays a major role in determining the profit of your business Inventory-This includes the raw materials in the storage, items in the production process, and finished goods that are available for sale Assets- Assets refer to the tangible or non-tangible property that helps in adding value to your business. There are current assets and fixed assets; current assets refer to the assets that can be converted into cash within one year whereas fixed assets refer to the assets that cannot be converted quickly into cash. Liabilities-Liabilities refer to the money that you owe. There can be short-term liabilities and long-term liabilities, short term liabilities refer to the ones that are due within one year whereas long-term liabilities refer to the ones that are not due within one year.