As you can see from the image above accounting is seen as a particularly difficult subject stopping people that would be perfect in one of the many accounting career pathways from going down that route. But is it really as hard as we think, or are the confusing words and myths around degree level maths skills making it sound worse than it is?
In this article we will simplify 5 accounting terms hoping to show you it’s not as bad as it sounds!
Term 1: Accounts Payable
This just means your business has been given a product or service but has not yet paid for it.
Example: Your business has bought 5 new laptops from a supplier and asked to have them now but pay for them next month – this would be accounts payable.
Term 2: Accounts Receivable
This is the same as the above but the other way around, with your business being the supplier.
Example: Your business has supplied 5 new laptops to another company that have asked to have them now but pay for them next month – this would be accounts receivable.
Term 3: Liability
This is any money your business still needs to pay. This would include things like loans, employee wages and rent for the office.
Term 4: Inventory
This is anything your business has bought to sell to customers that they haven’t yet sold.
Example: Your business sells chocolate bars, they bought 500 to sell to customers, so far they have sold 200. The current inventory would be 300. As more are sold this number would go down.
Term 5: Asset
This is anything your business owns that is worth money.
Examples: Your office, company cars, stock, furniture, etc.
Hopefully this article has shown you that once you know what these words mean, they aren’t as difficult as they sound. If you are interested in getting you accounting career started or improving your skills, you can view our courses here or view our latest apprenticeship vacancies here.