To be a successful startup founder, we don’t need to be an accounting expert; we can outsource that. But we do need a solid grasp of basic accounting concepts. As a small business owner, we need more than an intuitive feel for the performance of the business. Understanding a few basic Accounting 101 concepts goes a long way towards keeping the goals for a company in alignment with performance. Here are 5 accounting concepts to get started.
The Balance Sheet
A great place to start, when evaluating the performance of an organization is how to decipher a balance sheet. At a minimum, we should understand assets and liabilities, and how they relate to one another. Assets are what we own, which includes contracts we haven’t taken payment on. Liabilities are debts, as well as goods and services that we have taken payment for that we must contractually deliver.
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