What it is:
Accounts Payable refers to the amounts a business owes to its suppliers or vendors for goods and services received but not yet paid for. It's a liability account on the balance sheet.

Why it matters:
Managing AP effectively ensures that a business maintains good relationships with suppliers, takes advantage of payment terms, and manages cash flow efficiently. Delays or mismanagement can lead to penalties or strained supplier relationships.

How it’s used:
When a business receives an invoice, it's recorded in the AP account. Payments made reduce the AP balance. Regular reconciliation ensures that all obligations are accounted for and paid on time.

What it is:
Accounts Receivable represents the amounts owed to a business by its customers for goods or services delivered but not yet paid for. It's an asset account on the balance sheet.

Why it matters:
AR is a critical component of a company's cash flow. Efficient management ensures timely collections, which is vital for meeting operational expenses and investments.

How it’s used:
When a sale is made on credit, it's recorded in the AR account. As customers make payments, the AR balance decreases. Regular monitoring helps identify overdue accounts and take necessary collection actions.

What it is: An accounting method where you record income when it’s earned and expenses when they happen, not when money changes hands.
Why it matters: Gives a more accurate picture of your business performance, especially if you invoice clients or pay bills later.
How it’s used: Commonly used in larger businesses or those working with accountants

What it is:
Accumulated Depreciation represents the total depreciation expense that has been recorded against a fixed asset since it was acquired. It's a contra-asset account, meaning it offsets the asset's original cost on the balance sheet.

Why it matters:
This account provides insight into how much of an asset's value has been utilized over time. It aids in understanding the net book value of assets and is crucial for accurate financial reporting and tax calculations.

How it’s used:
When a business purchases a long-term asset, such as machinery or vehicles, it doesn't expense the entire cost immediately. Instead, the cost is spread over the asset's useful life through depreciation. Each period, a depreciation expense is recorded, and the same amount is added to the Accumulated Depreciation account. This continues until the asset is fully depreciated or disposed of.

What it is: A list that shows who changed what in your QuickBooks account.
Why it matters: Helps catch errors and track changes if something looks off.
How it’s used: Found under the gear icon in QBO.

What it is: A list of all the categories your business uses to track money—like income, expenses, assets, and liabilities.
Why it matters: Keeps your financial reports clean and accurate.
How it’s used: Built inside QuickBooks or your accounting software.

What it is: A temporary account used to hold money while it’s moving between categories.
Why it matters: Helps ensure clean reconciliations and accurate reports.
How it’s used: Often used when fixing books or moving funds from one account to another.

What it is: The direct cost of making or selling your products or services.
Why it matters: Subtracting COGS from sales gives you gross profit.
How it’s used: Tracked automatically in QBO when you link items to expense categories.

What it is: A way to spread out the cost of big purchases (like equipment) over several years.
Why it matters: It lowers your tax bill by letting you deduct a portion each year.
How it’s used: Accountants enter depreciation monthly or annually using a schedule.

What it is: Money the owner takes out of the business. It’s not a paycheck or expense.
Why it matters: It reduces equity and shows how much value the owner is pulling from the company.
How it’s used: Recorded in equity, not on the P&L. Must be tracked to stay IRS compliant

What it is: A report that shows how much money your business made and spent over time.
Why it matters: Tells you if you’re making a profit or losing money.
How it’s used: For taxes, business planning, and understanding your bottom line.

What it is: The total money your business earns before subtracting costs.
Why it matters: It’s your top-line income and key to tracking business growth.
How it’s used: Appears at the top of your P&L. Used for sales analysis and financial planning.

What it is: A temporary place where QuickBooks holds your customer payments before you deposit them in the bank.
Why it matters: Keeps your books accurate and prevents double-counting income.
How it’s used: Choose these payments when creating a deposit in QBO

What it is: Profit from past years that stays in the business instead of being paid out.
Why it matters: Shows what your business has saved and reinvested over time.
How it’s used: Found in equity on the balance sheet. Useful for long-term planning.