Mastering Accounting Lingo
26 Accounting Terms You Need to Know
Running a business involves a lot of moving parts—parts like filing taxes, bookkeeping, and record preparation. Whether you choose to hire a bookkeeper or try to wrangle the task yourself, you will need to know the lingo. We compiled the following list to help you begin:
Accounts Payable
Money you owe to someone else for the purchase of goods or services on account.
Accounts Receivable
Money your customers owe you for the purchase of goods or services on account.
Accruals
A list of incurred expenses that you have not paid yet or sales that you have not billed for yet.
Amortization
Using a fixed schedule of regular payments over time to repay a debt.
Appreciation
When the value of an asset increases over time due to changes in inflation or interest rates.
Assets
Things you own that have value such as property, equipment, cash, trademarks, stocks, etc.
Balance Sheet
A document that provides a broad overview of your assets, liabilities, and equity.
Capital
How much money you have access to for spending, investing, etc.
Capital Expenditure (CapEx)
Spending to acquire, maintain, or update physical assets like equipment.
Cash Fow
Total cash moving in and out of your business, the difference between the amount you had at the beginning of the period (opening balance) and the amount you have at the end (closing balance).
Equity
The amount of money invested in your company.
Fixed Expense
An operating expense that is constant in total for a period but varies with production.
Variable Expense
An operating cost that is constant per unit, and varies in total with production.
Accrued Expense
An expense you have incurred but not yet paid for.
Operational Expense
How much it costs to operate your business.
Financial Statement
This statement contains the income statement and balance sheet.
Fiscal Year
The period of time you have chosen to use for accounting and financial reporting purposes.
Forecasting
Using your previous financial information and records to predict and estimate future trends.
Income Statement
A document that summarizes your income and expenses.
In the Black
When your business is making profits.
In the Red
When your business is making a loss.
Liabilities
Debts your company owes.
Net Income
Your revenue minus expenses (including taxes, interest, etc.).
Profit and Loss (P&L) Statement
Lists earnings, expenses, and net profits for a specified period.
Reconciliation
The process of checking your records with another set of records (such as bank statements) to ensure your numbers are correct.
Revenue
The money you collect for your goods or services (before any expenses have been deducted).
With these terms in your pocket, you’re ready to tackle your business. Should you decide to hand off bookkeeping to a team of experts, give Yeater & Associates Greeley bookkeeping specialists a call at 970-378-4830.
