1. Money

Accounting Terms

Glossary of terms commonly used in business accounting.

Accounts Payables
Accounts Payable is the monies the company owes for goods or services received, but not yet paid for.

Accounts Receivables
Receivables are also sometimes known as accounts receivables and represents money that is owed to a company by its customers.

Accrual Basis Accounting
In the accrual basis accounting system, income is recorded when it is earned even if monies have not yet been received. Expenses are recorded when they occur - not necessarily when they are actually paid.

Assets
In accounting terms, assets refers to the economic value portion of a corporation, or the that is owned by an individual(s). Assets generally refer to values that can be converted to cash.

Balance Sheet
A balance sheet is a summary of the state of a business' financial situation at a specific point in time. It includes information about assets, liabilities, and net worth.

Cash Basis Accounting Method
Cash basis recordkeeping requires is the simplest method of business recordkeeping and requires less knowledge of accounting principals because it works on a strictly cash-in, cash-out basis.

Cash Flow Statement
An accounting statement that forecasts cash receipts and disbursements for a specified period. The statement is used for planning purposes to determine if a business will need to borrow money in order to maintain its operations during times of heavy expenses or low sales.

Chart of Accounts
A Chart of Accounts is a list of numbered accounts containing ledger account names and numbers showing classifications and sub-classifications that are affected by the financial transactions of a business.

Current Liabilities
In accounting terms, current liabilities are debts and obligations that a company must pay in the short-term (within the next twelve months.)

Double-Entry Bookkeeping Method
Double-entry bookkeeping is an accounting method to balance a business' books. For every journal entry credit (recorded under the company's equity side), there is an equal journal entry debit (recorded under the company's assets side.)

Financial Statements
Financial statements are reports that show how income and expenses have affected the company as a whole. They provide a snapshot of the current financial standing of the business.

Fiscal Year Accounting Period
There are two ways to file your business income tax: calendar year period or a fiscal year accounting period.

Income Statement - Profit and Loss Statement
An accounting statement that shows the profit or loss for a business, by subtracting costs from its earnings, over a specific period of time, typically for a quarter or year.

Journal (in Accounting Terms)
A journal details all the financial transactions of a business and which accounts these transactions affect. All business transaction are initially recorded in a journal using the double-entry method of bookkeeping. Debits are entered before credits.

Journal Entry
A journal entry is the record of a financial transaction recorded (entered) in a journal. All business transaction are initially recorded in a journal using the double-entry method of bookkeeping.

Ledger, General Ledger, Subsidiary Ledger
A ledger contains summarized financial information that is classified by assignment to specific account number using a Chart of Accounts. A General Ledger contains a summary of all the information recorded in subsidiary ledgers which are ledgers that break down and show information according to classifications.

Liability - Liabilities
In accounting terms, a liability is a debt or obligation that a company must pay.

Long-Term Liabilities
Long-term liabilities are a category of debts (assigned under a Chart of Accounts) that appear on the company's balance sheet. Long-term liabilities are debts that will be repaid in the next year or longer.

Owners' Equity - Net Worth
Owners' Equity is the combined investments of the owner(s) and the accumulation of profit or losses for the business since it began. Also called, Net Worth, Owner's Capital, Net Assets, Shareholders' Equity, or Shareholders' Funds.

ROI - Return on Investment
Return on investment - or ROI - is the rate of revenues received for every dollar invested in an item or activity.

Single-Entry Bookkeeping
The single-entry bookkeeping method records entries once and does not "balance" the transaction out by recording an opposing credit or debit. Single-entry accounting is simple and easy to master. It works like the accounting method people use to reconcile their checkbooks.

Working Capital
Working capital is how much in liquid assets that a company has on hand. Working capital is needed to pay for planned and unexpected expenses, meet the short-term obligations of the business, and to build the business.

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