Accounting Glossary Flashcards
Accounting
Can be called the language of business, it is the interpretation and presentation of financial data to business owners and investors. Typically consists of generating: - financial statements and reports - budgets - tax returns - business performance analysis
Accounting Software
Software that does various accounting and bookkeeping tasks, stores business’ financial data, and can also be used to perform business transactions.
Accounts Payable
The amount of money a business owes creditors (suppliers, etc.) in return for goods and/or services received by the business.
Accounts Receivable
The amount of money owed to the business by customers or clients after delivery/use of goods/services. Also known as receivables, trade debtors, or AR.
Adjusted Trial Balance
An internal document that lists the general ledger account titles and their balances after any adjustments have been made. The total amount of the debit balances must be equal to the total amount of credit balances.
Assets
“The stuff the business owns.”
Something owned by the entity which will be used in the business and used to generate revenue.
Balance Day Adjustments
Adjustments that need to be made on some accounts at the end of the financial year, so that they accurately reflect the position of the business.
Balance Sheet
A financial report that summarises a business’ assets (what it owns), liabilities (what it owes), and owner or shareholder equity at a given time.
Also known as a statement of financial position.
Bookkeeping
Term used to describe the recording and organisation of financial data. Typically consists of: - payroll - invoicing - receipts and bills - recording business transactions
Business Accounting
The systematic recording, analysisng, interpreting and presentation of financial information.
Capital
“The stuff the business owes to the owners.”
Includes cash and other assets introduced by the owners into a business which is normally as separate components, and then as a total capital figure or opening capital it represents the ownership in a company.
Chart of Accounts
A listing of all accounts available to be used to record accounting entries, typically in numerical order (binary code) and grouped into the five accounting elements: assets, liabilities, equity, revenue and expenses.
Cash flow and cash flow management
The revenue or expense expected to be generated through business activities. The process for tracking how much money is coming into and out of the business
Cash flow statement
A financial report that shows where money has come from and where it is going to. Also known as statement of cash flow, or CFS. Unlike a income statement, a cash flow statement only includes spendable money.
Credit
An accounting entry that may either decrease assets or increase liabilities and equity on the balance sheet.
Current assets
Assets that will be converted to cash within one year, such as:
- cash
- inventory
- accounts receivable
Debit
An accounting entry where there is either an increase in assets or a decrease in liabilities on a balance sheet.
Double-entry accounting
In the double-entry system, transactions are recorded in terms of debits and credits. Since a debit in one account offsets a credit in another, the sum of all debits must equal the sum of all credits. This makes it easier to prepare accurate financial statements and detect errors.