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General Accounting Terms

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General Accounting Terms

Uploaded by

spuppresident.nfjpia2425
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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General Accounting Terms

1. Assets
Resources owned by a company that have economic value and can be converted into
cash. Examples include cash, inventory, and property.
2. Liabilities
Obligations or debts a company owes to external parties, such as loans, accounts payable,
and mortgages.
3. Equity
The residual interest in the assets of a company after deducting liabilities, often referred
to as "owner's equity" or "shareholder's equity."
4. Revenue
Income earned from the sale of goods or services during a specific period.
5. Expenses
Costs incurred in the process of earning revenue, such as rent, utilities, salaries, and
depreciation.
6. Net Income
The profit or loss of a company, calculated as Revenue - Expenses.
7. Cash Flow
The movement of cash in and out of a business. It includes operating, investing, and
financing activities.
8. Depreciation
The allocation of the cost of a tangible asset over its useful life.
9. Amortization
Similar to depreciation but applies to intangible assets like patents or goodwill.
10. Accounts Payable (AP)
Amounts a company owes to suppliers for goods or services received but not yet paid for.
11. Accounts Receivable (AR)
Money owed to a company by customers for goods or services delivered but not yet paid
for.

Financial Reporting Terms

12. Balance Sheet


A financial statement showing a company’s assets, liabilities, and equity at a specific
point in time.
13. Income Statement
A financial statement summarizing revenue, expenses, and profits over a specific period.
14. Statement of Cash Flows
A financial statement detailing the cash inflows and outflows during a period.
15. General Ledger
A record-keeping system used to record and summarize all of a company's financial
transactions.

Auditing and Tax Terms


16. Audit
An independent examination of financial statements to ensure accuracy and compliance
with regulations.
17. Taxable Income
The amount of income subject to tax, calculated as Gross Income - Allowable
Deductions.
18. Deferred Tax
A tax liability or asset arising due to temporary differences between the accounting and
tax treatment of income.
19. Internal Controls
Processes and procedures implemented to ensure accuracy and reliability in financial
reporting.

Management Accounting Terms

20. Budgeting
The process of creating a plan to allocate financial resources.
21. Cost of Goods Sold (COGS)
The direct costs attributable to the production of goods sold by a company.
22. Break-Even Point
The level of sales at which total revenue equals total expenses, resulting in no profit or
loss.
23. Variance Analysis
The process of analyzing the difference between planned and actual figures.
24. Overhead Costs
Indirect costs incurred in the operation of a business, such as rent, utilities, and
administrative expenses.

Advanced Terms

25. Accrual Accounting


Accounting method where revenue and expenses are recorded when earned or incurred,
not when cash is exchanged.
26. Double-Entry System
A bookkeeping method that involves recording every transaction with at least two entries:
a debit and a credit.
27. Retained Earnings
The cumulative amount of net income retained by a company instead of distributing it as
dividends.
28. GAAP (Generally Accepted Accounting Principles)
A framework of accounting standards, principles, and procedures used in the preparation
of financial statements.
29. IFRS (International Financial Reporting Standards)
A global set of accounting standards for financial reporting.
30. Capital Expenditures (CapEx)
Funds used by a company to acquire or upgrade physical assets like buildings or
equipment.

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