Alchemist- An accounting and consulting firm for your assistance.

Accounting Terms & Concepts Every Entrepreneur in Dubai Must Know

global

Your company's accounting team will take care of your company's financial processes, thus allowing you to concentrate on your core talents. Entrepreneurs must be a jack of all trades and must know a thing or two about accounts rather than relying solely on accountants or accounting service firms in the UAE.

Knowing accounting terms and concepts can help you talk about the state of your business with clients and stakeholders. Moreover, potential investors and lenders will be comfortable that their money is in the right hands of a firm that understands what they are doing. That said, here are some of the key business accounting terms and concepts every entrepreneur must know.

1. Assets

Assets are anything with monetary value that may be exchanged for cash. Assets such as equipment, financial security, and patents can provide cash flows in the future. Machines, vehicles, and real estate properties are examples of tangible assets. You can also include intangible assets, such as trademarks and patents. Assets have tax implications, which can also be considered for cash.

2. Balance Sheets

A balance sheet is a financial statement that states your business’s current financial position, which includes assets, liabilities, shareholder equity, etc. The balance sheet is one of the crucial financial statements that are used to gauge your business. It is usually used to check your company’s worth and your obligations to others.

3. Cash Flow

Cash Flow is the net amount of cash that is moved in and out of your business. It is usually considered as cash flows from operations, investing, and financing. Cash flow is necessary to understand a company’s liquidity, flexibility, and overall financial performance. Cash flows are studied using a cash flow statement that carries all the information about the company’s sources and cash usage over a specific period.

4. Financial Statement

Financial statements are financial information that reflects your company's operations and financial status. Accounting firms in Dubai frequently audit income statements before submitting them to the government, free zone, and other license issuing authorities, banks, and other entities. The balance sheet, income statement, and cash flow statement are the three financial statements.

Financial statements are used by investors, lenders, government agencies, and financial experts to assess a company's financial performance and future direction. The audited financial statement also assists stakeholders in determining whether or not there has been any fraud or embezzlement.

5. Profit and Loss Statement

A profit and loss statement (P&L Statement) highlights the company's revenues, costs, and expenses during a specific period. A profit and loss statement reveals a company's potential to make money by cutting costs, boosting revenue, or doing both. P&L statements are often presented on a cash or accrual basis. A Profit and Loss statement is called an Income statement in accounting or business lingo.

6. Return on Investment (ROI)

Return on investment (RoI) is a performance indicator that measures how much money was made from a given investment. It's a common indicator for determining how well a given investment fared. The ROI is determined by dividing the return by the cost of investment. The outcome is given as a percentage or a ratio.

7. Expenses

An expense is everything you pay to keep your firm running and functioning daily. Wages paid to your employees are an expense, as is the rent you pay for office space. Purchasing ink for your printer from a store is also considered an expense. Accounting companies in Dubai can assist you in keeping track of your spending.

8. Liabilities of a company

A company's liabilities are its outstanding debts. Loans are typically a company's obligations, although they can also comprise everything from the amount payable to credit card dues or unpaid taxes.

9. Value Added Tax (VAT)

A tax on the consumption or use of products and services is known as Value Added Tax (VAT). The VAT is the sole tax imposed on companies operating in the UAE (other than excise tax). VAT is charged at a regular rate of 5% in the UAE. If a company's taxable supplies, purchases, or imports exceed AED 375,000 per year, it must register for VAT in the UAE. Companies can register for VAT voluntarily if taxable supplies, imports, or acquisitions exceed AED 187,500 per year. Accounting service firms in the UAE can assist businesses with VAT registration, filing VAT reports, maintaining records, etc.

Alchemist Accounting: Your Reliable Chartered Accountants in Dubai

Some small business owners are eager to participate in accounting functions, while others are not. While the first group of entrepreneurs may have an easier time dealing with financial issues, the second group may struggle owing to a lack of accounting understanding. Such entrepreneurs need not worry as chartered accountants in Dubai, such as Alchemist Accounting, are there to assist you.

Alchemist Accounting can assist you with a variety of accounting services in Dubai, including financial statement preparation, record keeping, annual audits, tax returns, and much more. We have more than two decades of experience in the UAE and can help with difficult issues like Economic Substance Regulation (ESR), Anti-Money Laundering and Counter-Terrorism Financing (AML-CFT), Ultimate Beneficial Ownership (UBO), etc. We are happy to assist you in climbing the ladder in the UAE's extremely competitive market.