Business Accounting

Essay by siah_226High School, 11th gradeA-, July 2006

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If you're going to be in business, you must know how to keep score. To gain this knowledge will require that you go to school to learn both accounting and computer software that is used to support your particular business. With this knowledge, you can talk intelligently about your accounting needs with employees, bankers, and your own accountant.

The financial matters you will confront in your own business are little different from those of large corporations. Financial tools, coupled with an understanding of how to use them, will assist you in the proper management of your business. Without this understanding and without a dedicated commitment to using financial tools, you reduce your chances of success.

Your business will be judged by the classic financial measures: the balance sheet, the profit and loss statement, and the cash flow statement. These three measurements will define the financial health of your company.

In this session you will learn how:

* The balance sheet tells how much the business is worth.

* The profit and loss statement tells if your business is profitable or not.

* The cash flow statement predicts your cash balances into the future.

As a business owner you need to feel comfortable with the values portrayed by each measurement. Understanding these three measurements will whet your appetite to learn more, which in turn will lead to your strategic use of credit and how to make choices tying operational activities to the best use of funds. They will help you make better decisions.

You will also need to gain knowledge of accounting in order to evaluate your competitors or businesses you might wish to acquire (or be acquired by). While information about companies may be obtained from stock brokers or interviews with key executives, the best source to learn about...