Glossary · Reading the business
Financial accounting
In short
This is the system of recording, summarizing, and reporting financial transactions for a business. It's how you understand the company's past performance and current health.
What it means in a deal
You'll spend significant time reviewing the seller's financial accounting records (P&L, Balance Sheet) during due diligence. This data forms the basis for your projections and valuation. Understand how the seller's accounting practices might differ from standard GAAP.
Related terms
Common questions about Financial accounting
- What if the business I'm buying has poor financial records or no formal accounting system?
- How do shared administrative services, like HR or accounting, automatically trigger affiliation for size determination?
- Does sharing common administrative services, like HR or accounting, automatically trigger affiliation for size determination?
- Are pre-closing legal and accounting fees eligible to be counted towards my equity injection?
- Can pre-closing legal and accounting fees associated with the acquisition be counted towards my equity injection?
- Can closing costs such as legal and accounting fees be included in the total project cost for the 10% calculation?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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