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Business accountant in Melbourne describes the terms used to identify economic information

In accounting, there are numerous important terms that are used in the financial statements written for companies. Our business accountant in Melbourne emphasises the importance for all companies to know the meaning of each of these terms and understand which financial statements they can be found in.

Asset
An asset is a resource of the business and our Melbourne small business accountants report assets on the statement of financial position.

Liability
Opposite to an asset, a liability is an obligation of a business and can also be found on the statement of financial position.

Equity and Contributed Capital
Equity can be found as the difference between liabilities and assets. Contributed Capital, also known as owner’s equity, can also be included in the statement of financial position.

Retained Earnings
Our small business accountants in Melbourne identify retained earnings as equity resulting from profitable operations. Retained earnings can be found on the income statement and statement of changes of equity.

Revenue
Revenue is an increase in assets resulting from selling a good or providing a service. Revenue can be found on the income statement, also known as the statement of comprehensive income.

Expense
Our small business accountants in Melbourne CBD identify an expense as a decrease in assets in order to sell a good or service. Expenses can also be found on the income statement.

For more details on the terms used to describe economic information, please contact our business accountant in Melbourne today.