Accounting Terms

Consistent accounting procedures are important in generating reliable financial statements for third parties such as analysts, investors and creditors. Banks and private lenders frequently require…

The Internal Revenue Service regulates what you can and cannot do in your Individual Retirement Account. A prohibited transaction is leveraging the IRA in any way, including borrowing from or using…

Liabilities are reported on a company balance sheet to indicate commitments for current or future spending. When reported with corresponding assets to offset liabilities, the balance sheet provides a…

Every organization, whether private, pubic, or non-profit, has to manage its money. An individual with an accounting degree has many possible career paths, from simple bookkeeper to chief financial…

In reference to accounting, liabilities are the claims against a business' assets. Long-term liabilities, also referred to as noncurrent liabilities, are those with a maturity period of more than one…

Businesses, both large and small, must account for the actual status of the items on which they spend cash. The proper recording of assets, liabilities, income and expenses is at the heart of a good…

Supplies on hand constitute a short-term asset available for use by a business. A typical set of financial statements records such supplies in the "Current Assets" section of the balance sheet, and…

The balance sheet essentially shows a snapshot of the financial wellbeing of the company at any given point. When looking at the balance sheet, you will notice assets listed as well as liabilities.…

A company uses various means to attract customers, gain market share and make money. Using gearing, the business invests in strategic, long-term initiatives and key, short-term projects that will…

By establishing fiscal guidelines, public officials open the door to a varied package of business legislation, industry-specific edicts and rules individual taxpayers must follow. Part of these…

Revenue productivity measures the amount of income or revenue that a certain resource produces for a business. There are two ways to measure revenue productivity: by using the average revenue…

Sales tax is levied by certain state and local governments to fund their programs and operate their governments. Businesses that sell goods that are taxable must collect this sales tax from the…

Long-term assets represent items a company retains for more than 12 months. The items often bring substantial value to a business. Intangible assets are a subgroup of a company's long-term assets.…

In simple accounting terms, a business's net worth, also known as equity, is determined by subtracting the amount of its liabilities from the value of its assets. Assets can take on many forms and may…

An asset is an item owned by an individual or business that offers monetary value to the owner. For accounting purposes, an asset is categorized as either tangible or intangible. Several factors…

Like many industries, insurance operates with its own particular language and terminology, which can be confusing to the layperson. Insurance accounting makes use of certain terminology used in the…

Businesses own many different types of property, which is disclosed on the company's financial documents, particularly the balance sheet. The balance sheet is a financial report that shows the health…

Accounting treats assets differently according to their useful life. Assets such as property, plant and equipment, long-term investments and certain intangibles that are expected to contribute to…

You don't need to tie your long-term liability to an asset account. You can do whatever you want with borrowed money, as long as you pursue a law-abiding goal. The whole conversation about linking…

Managing a business requires many skills. Managers need to know how to facilitate optimal production among employees, executives must find ways to execute carefully laid plans for success, and…

"Total overhead contribution" refers to the costs associated with operating a business. It is imperative to know the total amount of overhead contribution when calculating pricing and providing…

Generally accepted accounting principles, or GAAP, mandate that a company record and report its transactions accurately and completely. These edicts focus on correctness, not only at the journal entry…

Tangible assets include any property that has a long life or is used in the operation of a business. Cash, equipment, machinery and plant are all considered tangible assets, according to…

Businesses continually look for new ways to increase profits. Profits go down when costs increase, but selling prices remain the same. Some companies choose to increase selling prices. This often…

Coding in accounting is the process of assigning numbers or letters to data to create a fast-search database. Accounting codes are not universal as every accountant, accounting firm, institution or…

Most accounting is done on an accrual basis, meaning that costs and revenues are recorded in the time periods of their occurrence. Since some transactions can be difficult to date, a system of rules…

Accountants place specific classifications on different business transaction types. Many of the classifications come from generally accepted accounting principles, the accounting law of the land in…

Every action a company engages in creates a financial transaction. The accounting department records these transactions in the financial records, which then feed into the preparation of the financial…

Business owners and managers must often prepare financial statements for their stakeholders to review. The stakeholders includes partners, employees, potential financial contributors and stockholders.…

A company generates revenue by selling products, such as hats, or services, such as legal representation. You must report revenue on the top line of your income statement, which is the amount from…

Tangible assets such as raw materials, property or cash have a physical existence. Tangible assets that have a monetary value can be passed on to heirs or sold. Intangible assets do not have a…

Companies invest in a variety of asset types, including current assets, fixed assets and intangible assets. Each asset type provides different benefits for the organization. Current assets provide the…

A normal component of all invoices is a section that states the payment terms. Payment terms refer to when the invoice is due and can be any terms a company sets forth. When a business creates…

Intangible assets are those items that individuals in a company cannot feel or see. In accounting terms, these include items that provide rights or privileges to a company. Examples include patents,…

A salaried employee is paid the same amount each week no matter how many hours she works. An hourly worker, however, tracks his hours, reports them and is then paid his hourly rate times the number of…

Every business has various types of resources and assets, some of which are clearly visible and others of which are less obvious. Buildings, vehicles, factories, manufacturing equipment and land are…

Business financial statements are used by managers and business owners to evaluate the financial condition of their company. Often, these statements are prepared once per month, at the end of the…

In accounting, assets are items owned by the business. Fuel and office supplies are two examples of assets. As assets are used up, they need to be replaced. The cost of replacing assets reduces income…

Accountants use specific terminology to describe financial events. Appropriations represent a distribution profit to certain accounts. Alternate terms include appropriate and appropriated. The terms…

Every profession uses its own language with its own definitions and context. Accountants use terminology foreign to many outside of this profession. Understanding the financial condition of the…

Assets represent any item that a company owns. Companies use their assets to operate their business, to finance their business and to invest for future business operations. Companies acquire assets…

Accounting is not just about numbers, but also the letters commonly used in acronyms and abbreviations. Accountants will tend to abbreviate account names or terms when writing journal entries or…

Accounting is the science of collecting, recording and compiling financial information so that it might be read and understood by its users. Managers use accounting information to monitor and optimize…

Expenditures refer to any outflow of cash for the business. Accounting departments plan for two main types of expenditures, which include capital expenditures and revenue expenditures. Each refers to…

Business accounting is a system that provides quantitative information about a company's finances. Understanding accounting terminology can make you financially savvy. For example, you can distinguish…

Debit and credit adjustments are journal entries that bookkeepers make to correct previously recorded transactions. These entries help companies abide by specific accounting norms, such as…

Embarking on an accounting career can be rewarding if you possess the skills and knowledge that employers look for. If you're a college student interested in accounting, paying attention to specific…

In accounting terminology, a going concern is an entity that will be able to continue to operate for a reasonable time. The Financial Accounting Standards Board (FASB) changed the meaning of…

Accountants help organizations make sure financial statements are accurate, complete and in line with regulatory guidelines. If you're an accountant, thinking about your short-term goals can help you…

Accounting departments utilize a variety of acronyms to identify responsibilities, departments or government agencies. While some acronyms are industry-specific, others exist universally. A/P…

The American Express Account Protector insurance provides help should you encounter a temporary medical hardship. Payment plans are available for hardships that are a result of unemployment, divorce…

Capital gain accounts may be a good way to save on taxes. Capital gain is the increase in the value of capital assets that may include bonds, shares, land and mostly real estate. Entrepreneurs and…

We are so familiar with the banking system record-keeping, we have skewed the meaning of debit and credit. When we hear the term debit, we automatically think of a debit as negative and a credit as…

EZTrader.com is an online brokerage firm that operates out of Cyprus, Greece. According to its website, it has developed a scope of business to suit the needs of both serious investors and average day…

Accounting is a complex financial practice that involves a basic understanding of financial and accounting terms. Many of these terms can help you understand how to financially manage, organize and…

Cash transactions make up the heart of any businesses' financial health. Businesses need cash to pay their bills and to fund the growth of the company. Customers pay their invoices using cash.…

Cost management in accounting terms is an integral component of managerial accounting systems. It is the means by which companies report, analyze, plan and control the costs of doing business through…

Accountants use industry language when speaking to each other. Acquiring a basic understanding of accounting and its terms helps non-accountants to interact with the accounting staff. Learning the…

Cost accounting is a term that tends to frighten most people. Learning basic cost accounting terminology can help business owners make sense of company reports. Cost accounting itself is the…

Accounting is a set of business processes that allow corporate leaders to evaluate the performance of operating segments in the short and long terms. Those working in accounting must understand key…

The definition of accounting profit is simply "profit before tax," according to the online Business Dictionary. BNET expands on this definition somewhat by pointing out that accounting profit is "the…

Financial terminology can be confusing to people with no accounting background. As with any profession, there are certain technical terms that are typical of the accounting world that may not be…

Revenue drives the growth of a business, providing a return to the owners and the funds to pay bills. Accountants determine net income by deducting expenses from total revenue. Accountants use…

Every profession, including accounting, uses terminology unique to its field. Small business owners, managers and employees who work with accounting staff should understand the language used by…

Accounting finance terms are part of the knowledge base on which accountants and financial professionals form their opinions, enabling corporate personnel to adeptly discuss and engage in…

Accounting is the discipline of tracking income and outflow for the purpose of informing financial decision making. Accounting professionals worldwide have adopted a common set of standards and…

Making yourself understood in Russian is a challenge. Real fluency only comes with immersion, that is, living among the target population for some time. In accounting, some things are made easier by…

Accounting and financial reporting is complex in any language. To ensure everyone is speaking as close to the same language as possible, there are the International Accounting Standards (IASs), which…

A debit memorandum, or debit memo, is used to notify a depositor or customer of a change, a refund or a charge on his account. A debit memorandum is typically used by a bank or a business that sells…

Knowledge related to some common accounting terms can help you conduct basic bookkeeping for personal accounts or help investors navigate the waters of corporate financial statements and reports.…

Reconciliation in accounting refers to the process of a company balancing its bank accounts with its bank statements. The process is done to balance out the accounts and ensure all transactions have…

A company needs to properly value assets, liabilities, revenues and expenses when recording transactions and reporting operating data. Senior executives usually make sure the firm records such…

When businesses purchase merchandise and goods, every order includes shipping terms. Shipping terms simply state who pays for the transportation costs of the goods and when ownership rights are…

A sales invoice is a fundamental component of business transactions. The information it contains and the way it is written ultimately impact the company's operations and financial statements.

Finance and accounting terms help an investor understand how companies record operating transactions and prepare financial statements. All organizations, including nonprofit entities and government…

Each profession has a lexicon that is singular to and understood by, oftentimes, only those who are part of that profession. It can seem like they are speaking a completely different language to…

In accounting, invoices are used to document the sale of a product or service. The invoice uses specific payment terms. Accountants need to be well-versed in these terms in order to understand how to…

Understanding accounting parlance can be critical in evaluating a corporation's financial statements because accountants and financial analysts prepare these statements in accordance with generally…

The accounting profession uses several terms to describe various economic events or financial transactions in business. While accounting terminology can be complex to the layperson, basic knowledge of…

In accounting parlance, equity represents ownership rights that a shareholder has in a corporation after purchasing shares of equity, or stocks. Equity also may represent initial investments that two…

The accounting profession has its own distinct set of terms used to describe various functions and applications. Within the profession, there are accountants who specialize in service industries,…

An accounting system is a record-keeping system based on gathering financial information, processing it and summarizing it into financial statements and reports. Most accounting systems are…

Net and gross are two of the most commonly confused accounting terms. Gross means before anything is taken out of the account. Net means after something is taken out of the account. For example, gross…

In accounting, principles and guidelines of bookkeeping are set by GAAP, Generally Accepted Accounting Principles. These principles and guidelines set up for businesses are in place for many reasons;…

An important part of accounting is tracking the information recorded on a company’s balance sheet. Over the past several years, accounting has transformed from creating simple measurements of…

Depreciation describes methods of allocating the value of a piece of capital equipment over a period of several years. Different types of machines have different depreciation periods because they last…

Business managers and owners are responsible for a variety of tasks and functions. Important business functions may include reducing costs from wasted inputs, the inefficient use of resources or too…

The process of accounting is basically the art of recording, organizing, analyzing and maintaining the financial activities of a business. To those unfamiliar with the process, any form of accounting…

Auditors review the integrity of financial information in an organization and the means used to gather and estimate such information. In layman's terms, they are accountants who ensure that other…

Long-term liabilities are liabilities that are longer than one year. For example, if you have a five-year truck loan, you have a long term liability and need to set up a long term liability account.…

Revenue is the recognition of a financial transaction that occurs in normal business operations. Companies earn revenue by selling goods and services to consumers or other businesses.

The accounting industry uses two primary terms to describe the amounts in journal entries: debit and credit. These terms result from the double-entry accounting system used by companies today.

Consolidation is the process by which the accounting data for two or more companies is combined to create one set of financial reports (see reference 1). Many corporations have diversified into…

When talking to business owners or investors, the term "breaking even" is often used. "Breaking even" in accounting terms means that the total income a business earns equals the total expense of…

The news is filled with stories about the financial woes of major corporations. Companies have filed bankruptcy while top managers insist they have no knowledge of how it happened. A business can fail…

In accounting terms, a standard margin is a measure of profitability for a business unaffected by "one-time" events, the random and the unpredictable. Standard margin is used to measure the…

Accounting is the basic process that an individual or an organization uses to record information about the property that the individual or organization owns, as well as the property or services that…

Anyone who takes care of a company's books is called a bookkeeper or accountant. This person must understand a certain grouping of terminology in order to do the job well. While there are many…

The term "services" in regards to services that you can hire a company to perform is actually quite broad. When considering premium rate services, the term refers to accounts and features for which a…