Accounting Terms You Need to Know
Chances are you spend most of your day at your dental practice conversing with fellow staff members and patients using common dental industry lingo. Providing quality dental services is what drives you to get out of bed in the morning. Yet, there’s another side to your practice…the financial side, which has its own lingo.
To understand what’s happening with your business finances, it’s a good idea to learn a bit about commonly used accounting terms and what they mean. Orlando accounting services use these terms often, and getting comfortable with these terms makes it much easier to monitor the financial stability of your dental practice, and strategize future financial goals.
Cash Flow (CF)
Money earned providing dental services generates a positive cash flow into your business, allowing you to continue daily operations. Negative cash flow means expenses are eating up too much revenue, and spending money on these expenses is putting your business in the red. A good CPA firm gives sound advice on how to maintain a positive cash flow to avoid trouble.
Balance Sheet (BS)
This is a report that provides a quick overview of all company assets and liabilities in summary form.
General Ledger (GL)
The ledger contains a complete history of every financial transaction made by your dental practice over its lifetime.
Accounts Receivable (AR)
Each time your office receives payment for dental services, these payments are recorded in the accounts receivable column of a balance sheet.
Accounts Payable (AP)
Money that goes toward expenses such as office supplies, dental equipment, and creditors fall under this designation.
Current Assets (CA)
These are assets that are utilized by your practice during the calendar year.
Fixed Assets (FA)
These are long-term assets associated with your practice. For instance, dental drills, X-ray equipment, and procedure room furnishings are fixed assets used year after year.
Fixed Expenses (FE)
These costs are baked into your dental practice and include expenses such as office space rent, dental and office supplies, employee payroll, insurance, and equipment maintenance.
Current and Long-Term Liabilities (CL and LTL)
Any debts paid within a fiscal year are considered current liabilities. Ongoing debts, such as bank loans, are long-term liabilities.
Net Income (NI)
This is the profit left over once all expenses are deducted.
Return on Investment (ROI)
Funds spent on patient acquisition is calculated to determine how much profit is gained after spending a sum of money.
Certified Public Accountant (CPA)
A professional who has passed the CPA exam and met all educational and government requirements.
Learning basic accounting terms helps you figure out what type of Orlando accounting services you need most. You’ll be fluent in accounting and dental speak, which greatly expands your financial options. To even further understand your financial position, contact CPA Solutions today.