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ACCOUNTING TERMINOLOGY

*Accounting - process of identifying, measuring, and reporting financial information of an entity 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 negative value for liabilities and equity. Depreciation - recognizing the decrease in the value of an asset due to age and use Double-Entry Bookkeeping - 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 - 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 - system of accounting in which transactions are entered into one account