Accounting For You
|Posted on 27 February, 2014 at 3:52|
Most trades and professions have their own ‘language’ and accountants are no exception. How many times have you heard certain account ting terms or phases and wondered what on earth the person using them is talking about?
Well in order to help you out, here are some of the more commonly used terms used by accountants in alphabetical order:
Accounts PayableAlso known as “Bought Ledger” or “Purchase Ledger”
Amounts companies owe suppliers for goods and services. Listed in the current liabilities section on the statement of financial position.
Accounts ReceivableAlso known as “Sales Ledger”
Amounts customers owe a company from sales of goods or services that the company expects to collect within one year. Listed in the current assets section on the statement of financial position.
A list of expenses that have been incurred and expensed, but not paid or a list of sales that have been completed, but not yet billed
Assets are resources controlled by the entity as a result of past events (usually transactions), from which future economic benefits are expected to flow to the entity.
Summary of a company's financial status, including assets, liabilities, and equity
A detailed plan, over a defined period (usually one year) with dollar amounts
Chart of Accounts
A listing of a company's accounts and their corresponding numbers
A summary of cash received and disbursed, within a specified period of time, showing the beginning and ending amounts
At least one component of every accounting transaction is a credit. Credits increase liabilities and equity and decrease assets.
At least one component of every accounting transaction is a debit. Debits increase assets and decrease liabilities and equity.
Recognising the decrease in the value of an asset due to age and use
Amounts paid to shareholders out of current or retained earnings
System of accounting in which every transaction has a corresponding positive and negative entry (debits and credits)
The money that you take out of a business to either live on and/or pay any personal expenses. Drawings are part of the net profit and not a business expense.
Money owed to the owner or owners of a company
The preparation and presentation of financial reports showing business cash flow, profit/financial performance and financial position. The analysis and interpretation of financial statements to help business owners and managers make informed decisions about their business.
A company's usual 12 month reporting period.
A record containing the balance sheet and the income/profit and loss statement
Long-term tangible property; building, land, computers, etc.
A record of all financial transactions within an entity
The difference between a business’s total sales and its cost of sales. Listed as a category on the statement of earnings. Also called gross income.
The original billing from the seller to the buyer, outlining what was purchased and the terms of sale, payment, etc.
A record for recording transactions
A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.
Provides information about particular activities within a business, including budgets, costing and evaluating business activities.
Net Profit Also known as “Net Income”
Money remaining after all expenses and taxes have been paid
The process of entering then permanently saving or “archiving” accounting data
Also known as "Income Statement" A summary of income and expenses
The process of matching one set of data to another; i.e. the bank statement to the check register, the accounts payable journal to the general ledger, etc.
The amount of net profit retained and not paid out to shareholders over the life of the business
Total income before expenses.
Statement of Account
A summary of amounts owed to a vendor, lender, etc.
Stock Also known as “Inventory”
Merchandise purchased or manufactured for resale at a profit
A list of the general ledger accounts and their total balances
Turnover Also known as “Operating Income”
Income generated from regular business operations