Accounting Glossary

by , under field-related glossaries, Vocabulary

Accounting vocabulary word cloud

Accounting vocabulary word cloud

Accounting Activities

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Grammar for Accounting

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Glossary of Accounting

A record or statement of financial expenditure or receipts relating to a particular period or purpose.
account payable
A liability account showing how much is owed for goods and services purchased on credit; “the problem was to match receivables and payables in the same currency”
account reconciliation
The act of confirming that the balance in one’s checkbook matches the corresponding bank statement.
The systematic and comprehensive recording of financial transactions pertaining to a business.
accounts receivable
Sales made but not paid for by customers (trade debtors), shown as current (short-term) assets in a balance sheet and are, in fact, unsecured promises by customers to pay
accumulated depreciation
The total depreciation on a tangible asset accumulated up to a specified date. This amount is subtracted from the original cost or valuation of the asset to arrive at its book value.
Reduce or pay off (a debt) with regular payments
A quantity of something, especially the total of a thing or things in number, size, value, or extent
An item of property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies
assignment credit
The book credit leveraged against the fiduciary assignment of a company’s receivables.
An organization of people with a common purpose and having a formal structure.
balance sheet
A financial statement that summarizes a company’s assets, liabilities and shareholders’ equity at a specific point in time
balance sheet analysis
An analysis of a company’s assets, liabilities and equity usually conducted at set intervals, such as quarterly or annually.
bank loan
Money borrowed from a bank
A legal proceeding involving a person or business that is unable to repay outstanding debts.
breakeven point
The point at which the income from the sale of a product or service equals the invested costs, resulting in neither profit nor loss; the stage at which income equals expenditure.
An estimate, often itemized, of expected income and expense for a given period in the future.
budgetary accountability
The process in Government Accounting of recording budgetary amounts in the accounts of a fund.
capital account
That part of the balance of payments recording a nation’s outflow and inflow of financial securities
capitalized interest
Interest that is not immediately expensed, but instead is treated as an asset and amortized over time in the income statement.
cash cycle
The length of time between the purchase of raw materials and the collection of accounts receivable generated in the sale of the final product.
cash flow
The total amount of money being transferred into and out of a business, especially as affecting liquidity.
charge off
The declaration by a creditor (usually a credit card account) that an amount of debt is unlikely to be collected. This occurs when a consumer becomes severely delinquent on a debt.
chart of accounts
A created list of the accounts used by a business entity to define each class of items for which money or the equivalent is spent or received.
the act of committing or giving in charge
The belief that business systems should follow a safe approach to business practices.
An agreement between two or more parties to do or not do something specified.
The deduction of a payment made by a debtor from an amount due.
current assets
Any asset expected to last or be in use for less than one year.
current liabilities
Obligations such as deferred dividend, trade credit, and unpaid taxes, arising in the normal course of a business and due for payment within a year.
A party that receives or consumes products (goods or services) and has the ability to choose between different products and suppliers.
Something, typically money, that is owed or due.
A company or individual that owes a sum of money.
deferred revenue
Revenue that is considered a liability until it becomes relevant to the business at hand, such as a payment received for work that has not yet been performed.
A deduction from the usual cost of something.
doubtful account
Name given to an account that records the sums (accounts) whose collection looks uncertain. Such accounts are termed “bad debts” and are usually written off against the profit of the firm as expense.
down payment
An initial payment made when something is bought on credit.
A person or business that employs one or more people, especially for wages.
Total assets minus total liabilities; also called net worth or book value.
The act of expending something, especially funds; disbursement; consumption.
Pertaining to or of the nature of a union of states under a central government distinct from the individual governments of the separate states.
The management of revenues; the conduct or transaction of money matters.
financial statement
A document showing credits and debits.
fixed costs
A periodic cost that remains more or less unchanged irrespective of the output level or sales revenue, such as depreciation, insurance, interest, rent, salaries and wages.
free cash flow
The amount of cash that a company has left over after it has paid all of its expenses, including investments.
functional currency
Currency of the country (called the “primary environment” ) in which a firm conducts its business activities and generates most or all of its income and expenses.
An intangible asset that arises as a result of the acquisition of one company by another for a premium value.
gross income
Receipts and gains from all sources less the cost of goods sold. Also called “gross margin” and “gross profit.”
gross profit
Sales minus all costs directly related to those sales, including manufacturing expenses, raw materials, labor, selling, marketing and other expenses.
intangible asset
Reputation, name recognition, and intellectual property such as knowledge and know how.
A charge for a loan, usually a percentage of the amount loaned.
interest expense
The amount allocated for interest payments made by a company.
The action or process of investing money for profit.
leasehold improvement
A physical improvement made to a facility by a lessee that enhances the value of the facility.
An obligation that legally binds an individual or company to settle a debt.
Authorize the use, performance, or release of something.
liquid assets
Assets in the form of cash.
The availability of liquid assets to a market or company.
A sum of money borrowed and expected to be paid back with interest.
The result of selling assets for a price lower than the original purchase price.
The difference between a sale price and a cost.
margin of safety
An excess of a company’s actual sales revenue over the breakeven sales revenue, usually expressed as a percentage.
A debt instrument that is secured by the collateral of specified real estate property and that the borrower is obliged to pay back with a predetermined set of payments.
net earnings
The total revenue in an accounting period minus all expenses during the same period.
opening balance
The new amount on their balance sheet after financial statements are completed.
operating expense
An expense incurred in carrying out an organization’s day-to-day activities, but not directly associated with production.
A loan arrangement under which a bank extends credit up to a maximum amount against which a current checking account customer can write checks or make withdrawals.
A regular payment made during a person’s retirement from an investment fund to which that person or their employer has contributed during their working life.
periodic inventory system
A system where a business calculates its inventory by physically counting items at end of each accounting period rather than updating inventory continuously.
perpetual inventory system
A system where a business updates the quantity and availability of its inventory on a continuous basis, after each purchase or sale.
prime cost
The direct cost of a commodity in terms of the materials and labor involved in its production, excluding fixed costs.
A financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.
Acquisition through the payment of money or its equivalent.
real estate
Property consisting of land or buildings.
residual value
Estimated scrap value of an asset at the end of its economic or useful life.
retained earnings
Profit generated by a company that is not distributed to shareholders as dividends but is either reinvested in the business or kept as reserve for specific objectives.
return on net assets
A measure of a company’s financial performance, equal to net income divided by the sum of fixed assets and net working capital.
running cost
Money spent by a company for the purpose of managing the business and/or for operating machinery for use in the business.
A fixed amount periodically paid to a person for regular work or services.
A unit of account for the capital or stock of a company.
An owner of shares in a company.
The ability to meet maturing obligations as they come due.
The capital raised by a business or corporation through the issue and subscription of shares.
tangible asset
Equipment, machinery, plant, property that has long-term physical existence or is acquired for use in the operations of the business and not for sale to customers.
A compulsory contribution to state revenue, levied by the government on workers’ income and business profits or added to the cost of some goods, services, and transactions.
transfer pricing
The price that is assumed to have been charged by one part of a company for products and services it provides to another part of the same company, in order to calculate each division’s profit and loss separately.
trial balance
A statement of all the open debit and credit items in a double-entry ledger, made to test their equality.
variable cost
A periodic cost that varies in step with the output or the sales revenue of a company. Variable costs include raw material, energy usage, labor, distribution costs, etc.
Money that is paid or received for work or services, as by the hour, day, or week.