--- title: Basic Accounting Lingo for Entrepreneurs description: Master the basic accounting terms you need to know to make your business profitable. We cover gross margin, operating expenses, and more. image: https://www.ignitespot.com/hubfs/Screen_Shot_2016-05-05_at_10.36.05_AM.png --- Call us at[1-855-694-4648](tel:1-855-694-4648)             [![squareyoutube_copy](https://www.ignitespot.com/hubfs/2021_IgniteSpot/YOUTUBE.png "youtube")](https://www.youtube.com/channel/UCimfeJCvdyYVasnJCdMQhsw) [![facebook](https://www.ignitespot.com/hubfs/2021_IgniteSpot/FACEBOOK.png "facebook")](https://www.facebook.com/ignitespot/) [![IgniteSpot_logo](https://www.ignitespot.com/hs-fs/hubfs/2021_IgniteSpot/IgniteSpot_logo.png?width=187&height=72&name=IgniteSpot_logo.png "IgniteSpot_logo")](https://ignitespot.com) [![IgniteSpot Logo](https://www.ignitespot.com/hs-fs/hubfs/2021_IgniteSpot/IgniteSpot_logo.png?width=187&height=72&name=IgniteSpot_logo.png) ](https://www.ignitespot.com/) Menu ☰ # Basic Accounting Lingo for Entrepreneurs [PROFITABLE BUSINESS LEADER](https://www.ignitespot.com/blog/topic/profitable-business-leader) | May 5, 2016 | By [Eddy Hood](https://www.ignitespot.com/blog/author/eddy-hood) ![Basic Accounting Lingo for Entrepreneurs](https://www.ignitespot.com/hs-fs/hubfs/Screen_Shot_2016-05-05_at_10.36.05_AM.png?width=960&length=960&name=Screen_Shot_2016-05-05_at_10.36.05_AM.png) **** **** **** **** **** **** Do you feel lost when your accountant talks about your financial statements?   There's a lot of basic accounting terms that  every entrepreneur should know.  In this video, I walk you through some of the most important ones.       ### ![Accounting_Terms.jpg](https://www.ignitespot.com/hs-fs/hubfs/Accounting_Terms.jpg?width=320&name=Accounting_Terms.jpg "Accounting_Terms.jpg")Getting Started with Basic Accounting Terms Here are a few key concepts that I feel are the most important for entrepreneurs: #### Revenue or Sales When you sale your product or service, the customer pays you.  The money that you get from the transaction is considered your revenue. #### Cost of Good Sold These are the costs that you incur to make your product or service.  They are usually direct labor and material. Depending on what you do, you may decide to add things like shipping and freight, commissions, etc.  #### Gross Profit This is the amount of money left once you subtract your cost of goods sold from your revenue. You then use your gross profit to pay for your overhead or operating expenses.  #### Gross Margin or Contribution Margin This is a financial metric, and one that I feel is vital to your success.  It's a percentage of your gross margin to your revenue.  **[Watch the video to learn how to calculate this bad boy.](https://www.youtube.com/watch?v=Y7Pm1_jEEKE)** #### Overhead or Operating Expenses These expenses exist even if you don't sell anything.  They include things like utility bills, marketing costs and your outsourced accounting team.  Wink, wink. #### Net Income or Net Profit When all costs are paid for, this is what's left.  Often called the bottom line, it represents how you did. #### Net Margin Also a financial metric, this figure shows the percent of your net income to revenue.  Leave a comment in the blog post below if you have questions.  I would be happy to answer them and help you master your company's finances. Don't forget to have an amazing and profitable day. **Want to get all our future videos?  Subscribe to our YouTube channel now.** [![The Profitable Entrepreneur on YouTube](https://no-cache.hubspot.com/cta/default/396263/e5c8d2c7-a449-40b2-a98f-938468c76848.png)](https://cta-redirect.hubspot.com/cta/redirect/396263/e5c8d2c7-a449-40b2-a98f-938468c76848)   #### For additional reading, check out:  **[Basic Accounting Terms - Depreciation](https://www.ignitespot.com/basic-accounting-terms-depreciation)** **[Basic Accounting Terms - Financial Statements and Reports](https://www.ignitespot.com/basic-accounting-terms-financial-statements-and-reports)**   ## Related Blog Posts [![Haters Gonna Hate - How Taylor Swift Makes You a Better Entrepreneur](https://www.ignitespot.com/hs-fs/hubfs/Taylor_Swift.jpg?width=960&length=960&name=Taylor_Swift.jpg) ### Haters Gonna Hate - How Taylor Swift Makes You a Better Entrepreneur ](https://www.ignitespot.com/blog/haters-gonna-hate-how-taylor-swift-makes-you-a-better-entrepreneur) [![Drive Your Marketing Agency with Financial Business Reports](https://www.ignitespot.com/hs-fs/hubfs/Drive%20Your%20Agency%20with%20Financial%20Reports.jpg?width=960&length=960&name=Drive%20Your%20Agency%20with%20Financial%20Reports.jpg) ### Drive Your Marketing Agency with Financial Business Reports ](https://www.ignitespot.com/blog/drive-your-marketing-agency-with-financial-business-reports) [![HOW SMALL BUSINESS BOOKKEEPING SERVICE HELPS YOU TURN GREATER PROFITS](https://www.ignitespot.com/hs-fs/hubfs/Imported_Blog_Media/2202_08_GR_IGNITE_blog_feature_When%20Is%20a%20Part-Time%20CFO%20Right%20for%20Your%20Business_1@2x-1-1.png?width=800&length=800&name=2202_08_GR_IGNITE_blog_feature_When%20Is%20a%20Part-Time%20CFO%20Right%20for%20Your%20Business_1@2x-1-1.png) ### HOW SMALL BUSINESS BOOKKEEPING SERVICE HELPS YOU TURN GREATER PROFITS ](https://www.ignitespot.com/blog/how-small-business-bookkeeping-service-helps-you-turn-greater-profits) [View All Posts](https://www.ignitespot.com/blog) ### Explore ### Latest Posts ### Contact Us **Phone:** [855-694-4648](tel:8556944648) **Hours:** 9 AM - 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