Glossary for Common Accounting Terms

Fluent in the language is a requirement for good bookkeepers and accountants. They want to help make the most out of your bling! Keep reading! When working with professional money managers, you can use this glossary. It can be used for financial literacy, read full article.

Bling Lingo provides a glossary for common accounting terms…

ACCOUNTINGEQUATION:The basic accounting equation is used to calculate the Balance Sheet. It is:

Equities =

The owner can still have equity in the business. This is called a “loss”. The accounting equation…

assets = Liabilities + Owners Equity

ACCOUNTS Increases or decreases in equity, liabilities, assets, and other financial resources can be caused by business activity. These transactions are tracked by your accounting system in the accounts. An accounting system must track the movements on the Balancesheet of assets, liabilities as well as owners equity and owners liability. It also records income and expense statements. It can be one or many accounts depending on the level of detail required.

ACCOUNTS MONEY APPROVABLE: Sometimes called A/P. These are bills that your business owes government agencies and suppliers. You will be charged an account payable if the item has been ‘purchased’ but not paid yet, such as when it was bought ‘on-credit’. These are listed under the liability section, in the Balance Sheet.

ACCOUNTS RECEIVED: Sometimes called A/R. Receivables are the amount of money that you owe someone to pay for something they’ve sold. This number is the amount customers owe your business for products and/or service they purchased but have not yet paid. These accounts can found in the Balance Sheet’s Current assets section.

ACCRUAL BASED ACCOUNTING This accounting method is the best for your business. Mrs. Fernwicky would be delighted to sell you something immediately. You may not be paid for it in two weeks. Even if you receive the supply house statement next month, the paint you bought today will still need to be recorded. Cash basis accounting records both the purchase made when cash is received and the expense paid when the cheque is sent. It is difficult to get a true picture of your company.

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