Retained earnings: The company’s total net income or loss from the first day it’s in business to the date on its balance sheet.

John A. Tracy, CPA, is an award-winning professor emeritus of accounting at the University of Colorado at Boulder. He has authored The Fast Forward MBA in Finance, 2nd Edition, and Accounting Workbook For Dummies. from cream-of-the-crop content culled from several previously published books. It’ll help you to flourish in whatever niche you want to conquer in the wonderful world of accounting. You’ll also get free access to a quiz for each section of the book online. Income statement (also known as the P&L or profit & loss statement): A financial statement that summarizes sales revenue (and other income) and expenses (and losses) for a period and reports one or more different profit lines. Also, any unusual gains and losses are reported separately in this financial statement. The income statement is one of the three primary financial statements of a business included in its financial report and is also called the earnings statement, operating statement, simply the P&L, or similar titles.Demystify your financial statements and figure out what your accountant is talking about with this straightforward roadmap to the world of accounting

Fixed or capital assets: The shorthand term for the variety of long-life physical resources used by a business in conducting its operations, which include land, buildings, machinery, equipment, furnishings, tools, and vehicles. These resources are held for use, not for sale. Please note that fixed assets is an informal term; the more formal term used in a balance sheet is property, plant, and equipment. Depreciation refers to the decrease in your assets’ values over time. It’s important for tax purposes, as larger assets that impact your business’s ability to make money can be written off based on their depreciation. (We’ll discuss expenses and tax write-offs later on.) 9. EquityIf you are looking into a course because you work in accounting and want to learn more, it may be worth asking your employer to fund the course. Accounting Regulating Bodies Equity sources of capital, the individuals and financial institutions including private equity firms who invest money in the business and expect the business to earn profit on the capital they have invested. Sometimes a business will do this research and work as part of an initial business plan. Other times they learn about these requirements a little bit at a time as the business grows. Accounting Automation Do you know from your financial reports how much money your small business will have in the bank in six months? You should have a rough idea. If not, how can you budget for staff, premises and other outgoings?