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a business during a given period, while a negative balance indicates the opposite – that is more cash has flown out of the business than what has come in.
General Ledger
The general ledger is where an accountant would record all your entries. When recording these entries in your general ledger, all debit entries will be recorded on theleftandallcreditentrieswillbe recorded on the right. All of these entries are then summarized in your trial balance, which shows a total of your credit and debit balances. If you have performed the entire double entry method correctly without any errors, then your debit side of the trial balance should be the same as your credit side. Recording transactions through the double entry method gives you a comprehensive and detailed view of your financials. You can use this view to improve your understanding of these entries.
Bookkeeping
The term bookkeeping dates back to the days before computers were mainstream in accounting management. During this period, books would be used to record statements on a daily basis. Bookkeeping would hence be defined as the maintenance of your day-to-day transactions, regardless of whether they are transcribed in a book or on a computer.
Cash Accounting
Cash Accounting is an alternative method of accounting to accrual accounting. In this method, you record payments when you actually pay bills for them and not when the expense is incurred. This method
of accounting is primarily followed by most property managers today and is in play across firms in the industry.
Debit and Credit
There is nothing that confuses beginner level property managers more than debits and credits. Debits increase your assets and expenses account, while credit transactions increase your liability, revenue,andequityaccount.The opposite is true for both of them. Debits decrease liability, revenue, and equity accounts, while credits decrease assets or expenses accounts.
Diversification
Diversification is a proven method of reducing risk in an organization. The goal behind diversification is to allocate resources and capital in a clever manner across a multitude of assets. This should be done to ensure that one asset doesn’t determine or dictate the profitability or performance of a business. Property managers, however, rarely maintain or invest in external assets.
Fixed Cost
A fixed cost is one that does not change with the volume of sales or fluctuations in production capacity. For instance, both rent and salary won’t change if a company starts selling more or dealing with more clients. However, there are other variable costs in production that will definitely change with fluctuations or changes in the production capacity or the number of clients that a property manager is dealing with.
General Ledger
A general ledger is used to maintain a complete record of the financial transactions incurred by a business. The general ledger is the go-to document for organizations when it comes to preparing financial statements and finalizing entries. The general ledger is basically the document used to prepare all the information that eventually goes into the financial statements.
GAAP or Generally Accepted Accounting Principles
GAAP or generally accepted accounting principles act as a foundation or set of rules that all accountants over the globe have to abide by when running accounting systems and performing the act of accounting. These general rules are established with the intention of making comparisons in the world of accounting easier for everyone involved. Organizations can compare accounting records with those of an industry competitor and be sure that they’re comparing apples with apples and not apples with oranges. Due to the regulations laid down by GAAP, the accounting books and statements of all businesses are developed on the same principle.
Interest
This is something that you must have encountered in your personal accounts as well. Interest is the amount that businesses or personal individuals have to pay on a loan or a line of credit. The interest payment exceeds the principal balance and increases the amount you actually repay on loan.
Journal Entry
Journal entries are basically maintained to make updates and
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