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30 Basic Accounting Terms, Acronyms and Abbreviations Students Should Know

Accounting Cycle

❶Typically, this could be cash, inventory or accounts receivable. Records can be kept on paper, using a spreadsheet program, or using specialized accounting software.

2. Balance sheet

Accounting Terms/Accounting Dictionary/Accounting Glossary
Accounting Terms And Definitions
Accounting Concepts

An accountant using the double-entry method enters a credit under the accounts receivables column and a debit under the balance sheet's revenue column. When the client pays the invoice, the accountant debits accounts receivables and credits revenue. Double-entry accounting is also called balancing the books, as all of the accounting entries are balanced against each other.

If the entries aren't balanced, the accountant knows there must be a mistake somewhere in the ledger. Financial accounting refers to the processes accountants use to generate the annual accounting statements of a firm.

Management accounting uses much of the same processes but utilizes information in different ways. Namely, in management accounting, an accountant generates monthly or quarterly reports that a business's management team can use to make decisions about how the business operates.

Just as management accounting helps businesses make decisions about management, cost accounting helps businesses make decisions about costing. Essentially, cost accounting considers all of the costs related to producing a product. Analysts, managers, business owners and accountants use this information to determine what their products should cost. In cost accounting, money is cast as an economic factor in production, whereas in financial accounting, money is considered to be a measure of a company's economic performance.

An account balance is the amount of money in a financial repository, A closed account is any account that has been closed out or otherwise Adjustments will vary dependent upon how the AFE, dependent upon usage, is an acronym ALPHA is the measurement of returns from Asset Management, Account Manager, ARR is an acronym for Accounting Rate ASSET is anything owned by an individual ATP is an acronym for After Tax AUDIT is the inspection of the accounting It does not include things like bank loans or overdraft facilities.

Any payment for a service or product in advance of any work being performed is a 'receipt. Chapter 7 - Matching Principle The matching principle aims to minimize any mismatch in timing between when an organization incurs costs and when it realizes any associated revenue.

Chapter 8 - Example Income Statement An income statement is an accounting of revenue, expenses, and profit for a given period. This can also be an internal document that can be used to make management decisions about almost any activity where you have a record of the money spent and the associated return.

I Was Never One for Finance Like any manager, my focus was on getting the best out of my team and improving the bottom-line of the company. As a result, I was constantly devising strategies and plans to enhance productivity and commitment. I was never one for finance. My aim was to make my team the best in the organization. Yet, at my position, I could no longer ignore the importance of accounting statements of the company. The people in finance kept trying to explain what the statements showed but I didn't learn too much from them.

Their eBook on Accounting Principles takes the technical aspect out of financial statements and strips them down to their bare bones. For a non-accounting person like me, this is something very important.

Now I have a clear idea of what the three major statements, i. Not only that, I can measure the performance of my team in terms of tangible numbers, something I previously used to overlook. Perhaps the most important thing I realized was how the company spent cash. I never paid much attention to the spending and income simply because I didn't have the time or inclination for it. When I finally got around to seeing it, I saw the company wasn't in the best shape with regards to cash flow.

We were spending much more than the cash we had on hand. After reading Accounting Principles, I started working in tandem with the accountants to find ways to curb the outflow of cash. This is an achievement for someone unfamiliar with even the basic accounting concepts before then.

In the current economic climate, it is important for business managers to have a keen insight into the accounting aspect of their company.

Maintaining a healthy cash flow balance is as important as retaining profitability. I learned my lesson and so should you. At first, I thought that the eBook was too basic in terms of execution. It gave a primer on the main financial statements but didn't elaborate in much detail. This was something I felt was lacking in the eBook.

It was later that I saw that Free Management eBooks had several more eBooks on finance and accounting Skills on their website. Coming back to my experience, I also learned the meanings of a few basic, yet important accounting terms and principles.

For instance, I had no idea what accrual based accounting was but I do now. Same goes for the revenue recognition and matching principles of accounting. I was confused about the expenses which have to be accounted for yet where no money is being spent, like depreciation and bad debts.

Balance Sheet

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2 Amortize ‐‐ to charge a regular portion of an expenditure over a fixed period of time. For example if something cost $ and is to be amortized over ten years, the financial reports will show an expense of $10 per year for ten years.

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1. Accounting Period Any period of time utilised to measure accounting performance e.g. 1 year, 1 month, 3 months. 2. Accounts Payable (Sundry Creditors).

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There are various terminology used in the Accounting which are being explained as under: 1) Assets: An asset may be defined as anything of use in the future operations of the enterprise & belonging to. MODULE - 1 Business Environment Basic Accounting Principles Business Environment 1 5. dommonet.tk's accounting dictionary defines accounting terms in a way that is easy for anybody to understand.

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Dictionary of Accounting Fourth edition. Specialist dictionaries Dictionary of Agriculture 0 2 This dictionary provides a basic vocabulary of terms used in accounting, from personal finance and investments to company accounts, balance sheets and stock valuations. It is ideal for students of accounting and for. The American Institute of Certified Public Accountant has defined Financial Accounting as: “the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which in part at least of a financial character and interpreting.