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A farrier must understand general business terminology. Here are 25 terms you will benefit from understanding:
Accounts Payable — Bills to be paid as part of the normal course of business. Until the invoice is paid, the amount due is known as an accounts payable.
Accounts Receivable — Debt or money owed to you from sales of products or services, such as hoof-care work or products.
Accrual-Based Accounting — A business accounting method which assumes there will be bills to be paid (known as accounts payable) and/or sales made that will be paid later (known as sales on credit). You report income when it is earned.
Assets — Property of your farrier business, including cash, inventory, equipment, etc. Assets are any possessions that have value in an exchange or trade. The IRS defines assets, as they relate to taxes when you buy a piece of equipment. If you call a purchase an expense, then you can deduct it from taxable income. If you call it an asset, you can’t deduct it — however you can list it on your financial statement.
Bill — An acknowledgment that a specified sum of money is due for goods or services. A bill marked as paid becomes a receipt.
Break-Even Point — The actual amount of sales that your farrier business needs to earn in order to equal its expenses or costs so as to not lose or make money.
Cash Basis — A type of business accounting method that doesn’t use standard accrual…