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Accounting Glossary

The document defines key accounting terms used in financial statements and accounting records. It describes accounts payable and receivable, assets and liabilities, the balance sheet, income statement, equity, expenses, revenue, depreciation, inventory, and other terms related to accounting periods, accrual accounting, and the classification of current and long-term balances. The glossary provides concise descriptions of essential concepts in accounting.

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58 views

Accounting Glossary

The document defines key accounting terms used in financial statements and accounting records. It describes accounts payable and receivable, assets and liabilities, the balance sheet, income statement, equity, expenses, revenue, depreciation, inventory, and other terms related to accounting periods, accrual accounting, and the classification of current and long-term balances. The glossary provides concise descriptions of essential concepts in accounting.

Uploaded by

Pisokely Nana Jr
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Accounting Glossary

Account payable: an amount due for payment to a supplier of goods or services.

Account receivable: an amount due from a customer.

Accounting period: time period for which financial statements are prepared (e.g. month,
quarter, year).

Accruals basis: the effects of transactions and other events are recognised when they occur
(and not as cash or its equivalent is received or paid) and they are recorded in the accounting
records and reported in the financial statements of the periods to which they relate.

Accumulated depreciation: total depreciation of a non-current (fixed) asset, deducted from


original cost to give net book value.

Amortisation: process similar to depreciation, usually applied to intangible fixed assets.

Assets: anything the company owns that has monetary value; rights or other access to future
economic benefits controlled by an entity as a result of past transactions or events.

Balance sheet: a statement of the financial position of an entity that summarizes a company's
assets (what it owns), liabilities (what it owes) and owner or shareholder equity, at a given
time.

Current asset: an asset that is expected to be converted into cash within the trading cycle.

Current liability: a liability which satisfies any of the following criteria: (a) it is expected to be
settled in the entity's normal operating cycle; (b) it is held primarily for the purpose of being
traded; (c) it is due to be settled within 12 months after the balance sheet date.

Depreciation: the systematic allocation of the depreciable amount of an asset over its useful
life. The depreciable amount is cost less residual value.

Doubtful debts: amounts due from customers where there is concern that the customer may be
unable to pay.

Equity shares: shares in a company which participate in sharing dividends and in sharing any
surplus on winding up, after all liabilities have been met.

Expense: an expense is caused by a transaction or event arising during the ordinary activities
of the business which causes a decrease in the ownership interest.

Fixed asset: an asset that is held by an enterprise for use in the production or supply of goods
or services, for rental to others, or for administrative purposes on a continuing basis in the
reporting entity's activities.

Income statement: financial statement presenting revenues, expenses, and profit. Also called
profit and loss account.
Inventory: stocks of goods held for manufacture or for resale.

Investing activities: the acquisition and disposal of long-term assets and other investments not
included in cash equivalents.

Liabilities: anything the company owes that has monetary value; obligations of an entity to
transfer economic benefits as a result of past transactions or events.

Operating activities: the principal revenue-producing activities of the entity and other
activities that are not investing or financing activities.

Profit: calculated as revenue minus expenses.

Profit and loss account: financial statement presenting revenues, expenses, and profit. Also
called income statement.

Provision: a liability of uncertain timing or amount.

Purchases: total of goods and services bought in a period.

Retained earnings: accumulated past profits, not distributed in dividends, available to finance
investment in assets.

Revenue: created by a transaction or event arising during the ordinary activities of the
business which causes an increase in the ownership interest.

Sales: see revenue, turnover.

Share capital: name given to the total amount of cash which the shareholders have contributed
to the company.

Tangible fixed assets: a fixed asset (also called a non-current asset) which has a physical
existence.

Trade payables: amounts due to suppliers, also called accounts payable.

Trade receivables: amounts due from customers, also called accounts receivable.

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