Business Terms Glossary

What Is Accrual-Based Accounting?

Accrual-based accounting is standard business accounting, which assumes there will be accounts payable (Bills to be paid as part of the normal course of business) and/or sales on credit (sales made on account; shipments against invoices to be paid later), as opposed to cash basis only. For example, most businesses have regular bills such as rent,...

What Is Accounts Receivable (AR)?

Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid. The standard procedure in business-to-business sales is that when goods or services are delivered the come with an invoice, which is to be paid...

What Is Accounts Payable (AP)?

Accounts payable (AP) are bills to be paid as part of the normal course of business. This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive goods or services from a vendor, receive an invoice, and until that invoice is paid the...

What Is Equity?

Equity is business ownership—capital. Equity can be calculated as the difference between assets and liabilities. See Bplans’ articles on angel investment and venture capital for more.

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