If you are new to accounting for small business owners, you must know the three forms of accounting reports - balance sheets, income statements, and cash flows.

1. What is Business Accounting for Small Business Owners?
Unicorn Accountants
02080640454
www.unicornaccountants.co.uk
5 Merchant Square London W2 1AY
dream@unicornaccountants.co.uk

2. Introduction
If you are new to accounting for small business owners, you must know the three forms
of accounting reports - balance sheets, income statements, and cash flows.
Within the context of a balance sheet, assets, liabilities, and capital play pivotal roles.
Essential Accounting Principles Every Small Business Owner Must Know
Blog source - Mastering Accounting Essentials: A Comprehensive Guide for Small Business Owners
1. The Accrual Basis vs. Cash Basis Accounting
• Accrual Basis: When revenue or expenses are incurred or generated.
• Cash Basis: Revenues are only recorded under the cash basis of accounting when
cash is received.

3. The accounting equation is a method that tracks financial transactions. It states -
Assets = Liabilities + Equity
• Assets: These are what the business owns.
• Liabilities: These represent what the business owes.
• Equity: Equity represents the remaining ownership stake in the entity's assets once all liabilities
have been subtracted.
Blog source - Mastering Accounting Essentials: A Comprehensive Guide for Small Business Owners
2. The Accounting Equation:
3. Revenue Recognition:
Revenue must be recorded when the products or services have been delivered, and payment is
expected.

4. 4. Expenses Recognition:
Blog source - Mastering Accounting Essentials: A Comprehensive Guide for Small Business Owners
Expenses should be recognised when they are incurred.
5. Double Entry Book-Keeping:
Each financial transaction in a double-entry bookkeeping system impacts two accounts, one of
which is debited, and the other is credited.
6. Chart of Accounts:
A list of all the accounts you use to monitor the financial activities.
7. Cash Flow Management:
Helps you make informed decisions about spending, borrowing, or investing.

5. 8. Financial Statements:
Blog source - Mastering Accounting Essentials: A Comprehensive Guide for Small Business Owners
Small business owners should be familiar with three essential financial statements –
Income Statement: Summary of the expenses, revenues, and net income.
Balance Sheet: Business's financial position including equity, liabilities, and assets.
Cash Flow Statement: Cash movement into and out of the business.
9. Financial Ratios:
Financial ratios provide insight into the efficiency and stability of your company's finances.
10. Tax Compliance:
Small businesses in London must adhere to tax rules and regulations.
11. Accounting Software:
Investing in accounting software can streamline the accounting processes and improve accuracy.

6. 12. Internal Controls:
Blog source - Mastering Accounting Essentials: A Comprehensive Guide for Small Business Owners
Protects the business against fraud and errors.
13. Professional Advice:
They are qualified to help you with tax planning, provide insightful advice, and ensure accuracy
of financial records.
How Can Unicorn Accountants Help You?
Our team comprises experienced accountants and financial advisors, ready to aid you in a wide range of
areas, including tax planning, compliance, financial reporting, and analysis.
Reach out to us today!

7. THANK YOU!
Unicorn Accountants
dream@unicornaccountants.co.uk
02080640454
www.unicornaccountants.co.uk
5 Merchant Square London W2 1AY - United Kingdom
Blog source - Mastering Accounting Essentials: A Comprehensive Guide for Small Business Owners