Accounts Payable (AP)
Money your business owes to vendors or suppliers for goods/services already received but not yet paid for.
Accounts Receivable (AR)
Money owed to your business by customers for goods/services already delivered but not yet collected.
Accrual Accounting
Recording revenue and expenses when they are earned/incurred, not when cash is exchanged. Required for most businesses over $25M revenue.
Balance Sheet
A financial statement showing what your business owns (assets), owes (liabilities), and the net value (equity) at a specific point in time.
Bank Reconciliation
The process of matching your internal books against your bank statement to catch errors, fraud, or missing transactions.
Burn Rate
How fast a startup spends its cash reserves each month. Used to calculate runway.
Cash Flow Statement
A report showing actual cash moving in and out of your business — separate from profit, which can be higher or lower than cash.
Chart of Accounts
The master list of all financial categories (accounts) used to organize every transaction in your bookkeeping system.
COGS (Cost of Goods Sold)
Direct costs of producing the goods or services your business sells. Subtracted from revenue to calculate gross profit.
Depreciation
Spreading the cost of a long-term asset (like equipment) over its useful life rather than expensing it all at once.
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of core operating profitability.
General Ledger (GL)
The master record of all financial transactions in your business. The foundation of your accounting system.
Gross Profit
Revenue minus Cost of Goods Sold. Shows how much you make before operating expenses.
MRR (Monthly Recurring Revenue)
Total predictable revenue a SaaS or subscription business expects each month.
Net Profit
Revenue minus all expenses (COGS + operating expenses + taxes). The "bottom line."
P&L (Profit & Loss)
Also called the Income Statement. Shows revenue, expenses, and profit over a period of time.
Payroll Reconciliation
Verifying that payroll records match bank statements and tax filings — catching errors before they compound.
Runway
How many months a startup can operate before running out of cash, based on current burn rate.
Sales Tax Nexus
A connection between your business and a state that creates an obligation to collect and remit sales tax in that state.
Working Capital
Current assets minus current liabilities. Measures short-term financial health and operational liquidity.
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