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Accounting Terminology

Accounting is the process of identifying, measuring, and reporting financial information of a business entity. The following terms are used commonly in accounting.

  • Accounting Equation - assets = liabilities + equity
  • Accounts Payable - money owed to creditors, vendors, etc.
  • Accounts Receivable - money owed to a business, i.e.: credit sales
  • Accrual Accounting - a method in which income is recorded when it is earned and expenses are recorded when they are incurred
  • Asset - property with a cash value that is owned by a business or individual
  • Balance Sheet - summary of a company's financial status, including assets, liabilities, and equity
  • Bookkeeping - recording financial information
  • Cash-Basis Accounting - a method in which income and expenses are recorded when they are paid.
  • Chart of Accounts - a listing of a company's accounts and their corresponding numbers
  • Cost Accounting - a type of accounting that focuses on recording, defining, and reporting costs associated with specific operating functions
  • Credit - an account entry with a negative value for assets, and positive value for liabilities and equity.
  • Debit - an account entry with a positive value for assets, and a negative value for liabilities and equity.
  • Depreciation - recognizing the decrease in the value of an asset due to age and use
  • Double-Entry Bookkeeping - a system of accounting in which every transaction has a corresponding positive and negative entry (debits and credits)
  • Equity - money owed to the owner or owners of a company, also known as “owner's equity”
  • Financial Accounting - accounting focused on reporting an entity's activities to an external party; ie: shareholders
  • Financial Statement - a record containing the balance sheet and the income statement
  • Fixed Asset - long-term tangible property; building, land, computers, etc.
  • General Ledger - a record of all financial transactions within an entity
  • Income Statement - a summary of income and expenses
  • Job Costing - a system of tracking costs associated with a job or project (labor, equipment, etc) and comparing with forecasted costs
  • Journal - a record where transactions are recorded, also known as an “account”
  • Liability - money owed to creditors, vendors, etc
  • Liquid Asset - cash or other property that can be easily converted to cash
  • Loan - money borrowed from a lender and usually repaid with interest
  • Net Income - money remaining after all expenses and taxes have been paid
  • Non-operating Income - income generated from non-recurring transactions; ie: sale of an old building
  • Note - a written agreement to repay borrowed money; sometimes used in place of “loan”
  • Operating Income - income generated from regular business operations
  • Payroll - a list of employees and their wages
  • Profit - see “net income”
  • Profit/Loss Statement - see “income statement”
  • Revenue - total income before expenses.
  • Single-Entry Bookkeeping - a system of accounting in which transactions are entered into one account
accounting_terms.txt · Last modified: 2020/07/07 17:48 by kevin