A typical set of accounts and what they mean

Assets

Cash in the bank or invested?               Cash & Equivalents

Who owes you money?                        Accounts Receivables

Have you paid an advance bill covering future months?       Prepaid

What products do you have to be sold in the future?           Inventory

What is the value of your property and equipment?             Fixed Assets

     Total Assets – resources of your organization to pave the way to profitability

Liabilities

What do you owe vendors or on credit cards?                    Accounts Payable

Are there payables that you have not been billed for?         Accrued Expenses

Do you owe wages or benefits (Incl PTO) to staff?             Payroll liabilities

Do you owe taxes to government entities?                        Taxes Payable

Have you borrowed money or financed equipment?            Loans, Notes Payable

Total Liabilities: Can be considered the share of the organization that is owed to those outside your organization

Capital

Assuming your assets are greater than your liabilities, the net amount is the positive investment in your business. This is the amount of the organization that you actually own.

Once the balance sheet accounts are all in order, we can trust the revenue and expenses that have been recorded. 

Income Statement

Revenue          What has the world paid you / promised you for the work you do?

Costs               What did it cost you to complete the work you sold

Expenses       What did it cost for you to keep your organization running?

Net Profit or Loss               Did your organization make or lose money?