Here we are listing you some important accounting terminology that a employee needs to know:
Accounting is a very necessary subject in the business field. It is hard to imagine a business without accounting. Accounting terminology provides a complete description of the terminology used. It is very important to understand accounting terminology before delving into the subject.
It is important to understand accounting terminology before starting to learn accounting. In addition, knowledge about common accounting terms helps to understand accounting in detail easily. Some of them are as follows:
This is the first term in the accounting business . Accounts maintain records in a classified manner in the general ledger.
There are two types: one is the debit balance and the other is the credit balance. When the sum of debit entries is greater than the sum of credits, it is the debit balance, and if the sum of debit entries is less than the sum of credits, it is the credit balance.
Accounting is the process of helping to record, summarize, analyze, and report data related to financial transactions. In addition, it also deals with profit and loss issues in the business. Learn more about accounting concepts, principles and practices here in detail.
These are liabilities in a business or organization that show money owed to others. For example, money spent on unpaid bills and taxes. (Accounts receivable) This is an asset that represents money owed to companies and organizations by the other party. For example, the debtor owes money to the organization or credit sales made by the organization.
This is an accounting method that performs multiple functions, such as recognizing revenue when earning, rather than recognizing revenue when receiving, and recognizing revenue when incurred instead of expenditure. It is paid. In other words, the accrual system records all financial transfers when they occur, that is, records all financial transfers when they occur.
. It is a cash convertible property owned by a person. For example, land, buildings, and cash in bank accounts are all assets. Generally speaking, there are two types of assets: current assets and fixed assets.
An audit is a formal inspection and evaluation of an organizations records to ensure quality assurance, verify internal controls, eliminate fraud, and verify the effectiveness of policies. . (Balance) is a summary report of the company’s assets, liabilities, and net assets on a specific date. (Budget) The budget is the total demand for assets in the next year.
represents a decrease in an asset, or in other words, an expense incurred or added to a liability. Your entries are made on the right side of the balance sheet.
Represents the return on assets or gains obtained. Debt entry is done on the left side of the double-entry bookkeeping system.
Double-entry bookkeeping records financial transactions, in which each transaction goes to two or more accounts. In addition, it also means a two-way and self-balanced release. This means that there are equal and opposite effects for each input.
Expenses are funds paid by the organization or company. For example, pay salaries to employees, reimburse employees, and pay suppliers for goods or services.It is an independent, private, non-governmental organization that establishes accounting principles in the United States.
Financial statements are a series of reports that show a summary view of various financial activities of a company at a specific time. In addition, each report tells a different story about the financial activities that occurred in the organization.
A fiscal year is a period of 12 consecutive months selected by an organization as its accounting period. The mayor cannot be a calendar year. The general fiscal year used in India is from April 1st to March 31st. (Fixed Asset) A fixed asset refers to any physical object with a service life of more than one year, that is, illiquid. For example, building a business and necessary equipment.
Fund balance (net assets)
The fund balance represents the companys net assets. To arrive at this number, subtract total liabilities from total assets. In addition, any excess income in excess of expenditures or cumulative appreciation or depreciation of investments will become net assets at the end of the fiscal year. (GAAP) GAAP is the abbreviation of Generally Accepted Accounting Principles, including conventions and rules. In addition, define procedures required for generally accepted accounting practices at a specific time. In addition, the highest level of these principles is set by the FASB.
A ledger is a collection of all assets, liabilities, fund balances (net assets), income and expense accounts. (Profit and loss statement) The income statement is a summary report that shows the income and expenses for a specific period of time (for example, month, quarter, or fiscal year).
A journal entry is a set of debit and credit transaction records contained in the general ledger. Therefore, all journal entries must be zero, so the debit must equal the credit.
Responsibility is what the organization owes to others. For example, loans, taxes, long-term debt issued by bonds, and funds held by universities for third parties (such as a group of students). (Net income (loss)) Net income (loss) is the amount that the department loses in a specified time period. This figure is derived from total income minus total expenditure.
Restricted funds are funds established to record assets whose income must be used for purposes established by donors or donors. (Income) Income is the funds raised by the enterprise. , Can also be called income. For example, tuition, miscellaneous fees, etc.
Subsidiary ledger is a group of accounts that contains debit and credit entry details. For example, the details contained in accounts payable.
Unrestricted Fund is an accounting term that refers to a fund that has no restrictions on its use or purpose.
The bottom line
So these are some important accounting terms that every employee should know!