Any period of time utilised to measure accounting performance e.g. 1 year, 1 month, 3 months. 2. Accounts Payable (Sundry Creditors). Short term or current. Does accounting terminology have your head spinning? We're here to help with this handy list that defines the most common accounting terms. Common Accounting Terminology Glossary (Alphabetical order). Account. An account is a record used to properly classify the activity recorded in the General.
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The common set of accounting principles is called generally accepted accounting principles (GAAP). accounts payable creditor's claims against the business's. The NYSSCPA has prepared a glossary of accounting terms for accountants and journalists who report on and interpret financial information. What is Accounting? • Method of reporting financial activity of a business. • Financial transactions recorded in an orderly fashion.
Return To Top D debit an entry amount entered on the left side column of a journal or general ledger account that increases an asset, draw or an expense or an entry that decreases a liability, owner's equity capital or revenue. Every transaction is recorded in a formal journal as a debit entry in one account, and as a credit entry in another account.
Periodically, usually monthly, the summarized balances from the journals are posted transferred to a formal business record called the general ledger. Return To Top E electronic funds transfer EFT use of electronic communication to transfer cash from one part to another. Equipment is used in a business during the production of income. The stuff we used and had to pay for or charge to run our business.
Return To Top F factory overhead costs incurred during the manufacturing process, not including the costs of direct labor and materials. Factory overhead is normally aggregated into cost pools and allocated to units produced during the period. FIFO -first in first out cost flow assumption that assumes the oldest products are the first sold.
Financial Accounting Standards Board independent group of full time members responsible for setting accounting rules.
Return To Top G general journal a journal used to record transctions not recorded in special journals. Generally Accepted Accounting Principles rules that specify acceptable accounting practices.
Return To Top H historical cost original cost of an asset. Return To Top I income statement the financial statement that summarizes revenues and expenses for a specific period of time, usually a month or a year.
Return To Top J job costing an order-specific costing technique, used in situations where each job is different and is performed to the customer's specification. The journal is commonly referred to as the book of original entry. Return To Top L land asset account that records expenditures for parcels of the earth such as building sites, yards, and parking areas.
Amounts the business owes to others. LIFO -last in first out cost flow assumption that assumes the newest products are the first sold.
In other words, we earned less than we spent. Return To Top N net income amount earned after subtracting all expenses from revenue sales for a period - also called net profit. Return To Top O office supplies asset or expense account that records expenditures for maintaining a supply of on hand supplies such as typewriter, copier, and computer paper, pens, pencils, and special forms.
The good stuff left for the owner after all liabilities amounts owed are paid. Return To Top P partnership two or more people who share the ownership of a single business. In other words, the amounts we earned were greater than our expenses.
Return To Top Q quick assets cash and other assets that can quickly be converted into cash. Return To Top R real property land and anything attached to the land.
Costs are fixed for a set level of production or consumption, becoming variable after the level is exceeded.
Examples include an accounts receivable and accounts payable ledger. Return To Top T T-Account a skeleton outline of an account which provides the same basic data as a formal ledger account. Used as a teaching aid. The accounts are called temporary due to the fact that their balances are set to zero when the books are closed. A business deal or agreement. Used to make sure the books are in balance -total debits and credits are equal.
Return To Top U unearned revenue a liability created when customers pay in advance for products or services that have not been delivered or rendered. Most businesses track the amount spent for each type of utility service. Return To Top V variable costs are costs that varies in relation to changes in the volume of activity. Return To Top W wholesaler a business that downloads and sells large quanties of products to others for resale.
All you need to do is read each word or phrase carefully, then have a look at the definition and examples. After you feel like you really understand the word, try to think of your own example sentences. After that, you can do even more exercises online to improve your knowledge of accounting words.
30 Basic Accounting Terms, Acronyms and Abbreviations Students Should Know
Assets Definition: Everything a company owns, including cash, accounts receivable money a company is going to receive, see below , property and goods. Liabilities Definition: Everything that a company owes to others, like loans and mortgages. Example: Liabilities are recorded on the right side of the balance sheet, while assets are listed on the left. Debit Definition: An entry that shows what a company spends.
Debits are recorded on the left side of an account. Example: She recorded the download of the new laptops as a debit entry. Credit Definition: An entry that shows how much money a company receives.
Credits are recorded on the right side of accounts. Double Entry Definition: An accounting system in which each transaction is recorded as both a credit and a debit, an asset and a liability. Example: Double entry bookkeeping gives you a better perspective than single entry bookkeeping because it helps you make sure each transaction is accurately recorded.
Net Definition: An amount of money that is left after taxes have been paid. Gross Definition: An amount of money before taxes are deducted. Profit Definition: The money a business is left with after deducting all the expenses.
Example: In order to decide if the company was worth investing in, they wanted to look at the profit it had been making over the previous year. Revenue Definition: The total amount of money a company receives from the services or products it sells. The revenue is higher than the profit, because in order to calculate the profit, you need to first see the costs of doing business. Example: Our company has experienced a decrease in revenue due to the financial crisis.
Capital Definition: Cash and funds, but also machinery and tangible assets that can contribute to earning more money, like computers, company vehicles, etc. Intangible assets like expertise or reputation are not considered to be capital. Cash Flow Definition: Money coming in inflows and going out outflows of a company.
The word payroll also refers to the total amount of money paid by a company to its employees. Example: They have a lot of employees on their payroll, so they employ quite a few payroll accountants to calculate employee earnings. Accounts Payable Definition: Money that a company owes to other parties—companies or people—called creditors. Accounts payable are considered liabilities.
Example: All of the accounts payable need to be cleared before we can invest in new software. Accounts Receivable Definition: Money that a company has to receive for products or services bought by customers or clients.
Example: You can calculate the accounts receivable by adding up all the invoices the company generated. Appreciation can be the result of an increase in demand for a product or service. Depreciation Definition: The decrease in the value of products or services a company offers.
Depreciation can be due to a high supply of similar products or services offered by competitors.
Example: Because the company had almost no competitors just a year ago, nobody would have thought that their products would depreciate so much.Any citizen that is not a resident or citizen of the United States. The AICPA establishes ethical and auditing standards as well as standards for other services performed by its members. Compliance with aspects of contractual agreements or regulatory requirements related to audited financial statements. Double-Entry Bookkeeping - Requires entries of debits and credits for each financial transaction.
After you feel like you really understand the word, try to think of your own example sentences.