You may not have gone into thousands of dollars of college debt to be an accountant (you’re likely a property manager if you’re reading this, after all), but that doesn’t save you from needing to know the basics of accounting. It’s a fundamental aspect of any business and crucial to making sound decisions across the board, no matter your industry or expertise.
We know this sounds stressful, but don’t panic! As a jumping-off point, we’ll break down the top 16 accounting terms you’ll need to know as a property manager. Consider this article your quintessential property management accounting glossary.
Accounts Payable
Bills that are due and still need to be paid to your vendors.
Accounts Receivable
Money owed to your company that has yet to be received; usually by your residents.
Accrual Accounting
A method of accounting where income and expenses are recorded as they happen; whether or not money has been exchanged yet.
Asset
Anything your company owns that provides economic value now or in the future; often grouped by current assets (assets that can liquidate within a year) and fixed assets (also known as property, plant, and equipment).
Audit
An official examination of a company’s financial statements; usually performed by a third party.
Balance Sheet
A detailed record of a company’s total assets, liabilities, and equity at a particular point in time.
Cash Accounting
A method of accounting where income and expenses are recorded only once the money has been exchanged.
Cash Flow Statement
A record that shows the movement of cash within your business and how that affects the balance sheet; usually broken down into operating, investing, and financing activities.
Chart of Accounts
The classification of your transactions and your main reference in property management accounting; including assets, equity, expenses, income, and liabilities.
Credits
An item that reduces asset and expense accounts while increasing liability and equity accounts.
Debits
An item that increases asset and expense accounts while reducing liability and equity accounts.
Equity
The difference between your company’s assets and liabilities; or one’s financial share of the company.
Expense
Any bill paid by your company; including the cost of supplies, vendors, or any other operational cost.
Gross Income
The total earnings your company collects from doing business before any deductions.
Profit and Loss Statement
A report that shows your company’s net profit or net loss over a specified period of time by deducting expenses from gross income; also known as an Income Statement.
Knowing the basic terms associated with property management accounting is only the first step to accurate reporting for your business. For more accurate, reliable records, take your accounting digital and manage your business’ finances in one, easy-to-use place with ManageGo’s brand new accounting solution.
No matter your business goals, ManageGo has your back. To discover just how our software solutions can benefit you and your unique property management needs, request a demo today. Or, connect directly with one of our experts and get started on your journey to better property management. Plus, subscribe to our weekly newsletter to explore the industry, get the latest company news, and be the first to know about special announcements!
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