Working Capital is the money your business has available to cover its short-term expenses — like paying bills, buying inventory, or meeting payroll. It’s calculated using a simple formula: Working Capital = Current Assets – Current Liabilities

Understanding your Owner’s Equity is one of the most fundamental steps toward mastering your business finances. Yet many small business owners can’t clearly define what it means — or how it affects their day-to-day decisions. Let’s break it down in plain English.

Accrual accounting (also called the accrual method of accounting) records income when it’s earned and expenses when they’re incurred—not when the cash actually changes hands. In other words, if you send an invoice today but don’t get paid until next month, accrual accounting still records that sale today. Likewise, if you receive a bill for services this month but pay it next month, the expense is recorded when you receive the bill.

A trial balance is a simple accounting report that lists all of your business’s accounts — assets, liabilities, equity, income, and expenses — along with their ending balances at a specific point in time.

A journal entry is the official way businesses record each financial transaction in their accounting system. Every time money moves in or out — whether you make a sale, pay a bill, or buy supplies — it gets logged through a journal entry.

The main difference between a bookkeeper and an accountant is that a bookkeeper manages the day-to-day recording of financial transactions, while an accountant uses that information to provide analysis, interpretation, and strategic guidance. Bookkeepers focus on accuracy and detail in financial records; accountants focus on compliance, reporting, and planning. In short: bookkeepers keep the books, accountants make sense of them.