A trained professional who receives, arranges, and interprets financial information in ways that will avoid decisions and help apply the law to the business.
Accounting
The ordered process of following up, summarizing, and reporting financial transactions to gain understanding of the economy activities of a company.
Accounting Cycle
A series of steps in the accounting, which are followed starting the capturing of the transaction, until the final preparation of financial statements, which provide the basis for an accurate financial reporting.
Accounting Period
A stated period of time, e.g. a month, quarter or a year during which the financial activities are accounted for and reported.
Accounts Payable
Money's worth of products or services that a company received from vendors or suppliers, but has not as yet paid for.
Accounts Receivable
Amounts owing to a company to customers who have received some goods or services but have yet to pay.
Accrual Accounting
An accounting method in which revenues and expenses are identified at the time they are earned or used up (bought) and not at the time cash changes from one party to another.
Accruals
Income or expenses that have been earned or incurred but have not been yet recorded and reflect the actual financial position of the company.
Accrued Expenses
Money already born or accrued which a business has yet to pay, such as income tax, wages, interest, utility bills etc.
Adjusting Entries
End-of-period accounting entries which will be made to update revenues and expenses and ensure that financial statements are accurate and complete.
Amortization
The process of taking a debt smaller and smaller, or a systematic assigning the cost of an intangible asset to the life of the asset.
Annual Report
A yearly summary designed to give a broad picture of a company's financial performance, operations and highlights.
Appreciation
The rise in the value of an asset over a period of time, because of demand in the market, scarcity or enhanced utility.
Asset
Resources owned by the company which provide expected economic benefit in the future such as cash, property and inventory.
Audit
An independent audit of financial statements and records to ensure that they are accurate, compliant and reliable.
Bad Debt
Receivables that are doubtful to be collected which are written off as a financial loss.
Bad Debt Expense
The cost, which is recognized in the books when a company sees that certain accounts receiveable cannot be collected.
Balance Sheet
A Financial statement that depicts a company's assets, liabilities and equity at a particular point in time.
Bank Reconciliation
The process where a company, bank, etc., compares their accounting records with bank statements to make sure all transactions are recorded.
Bank feed
A feature of software that enables transactions to be automatically imported from a bank account into an accounting system, to be reconciled faster.
Bookkeeping
The process of recording all financial transactions systematically in order to keep all the records accurate and organized.
Bootstrapping
Growing a business with one's own money or internal cash flow without investment from outside.
Break-Even Point
The level of sales at which total revenue and total costs are equal and thus there is no profit or loss.
Budget
A financial plan, which shows expected income and expenses for a future time period, to manage the resources effectively.
Business Entity
An organization that is legal such as a corporation, partnership, or sole proprietorship that is separate from the owners.
Capital
Money or resources supplied to a business for operational, expansion purposes or investment purposes.
Capital Cost
The cost of acquiring or improving long term assets which is reflected on the balance sheet and depreciated over time.
Cash Accounting
An accounting method where revenues and expenses are only recorded when the cash is received or paid.
Cash Basis Accounting
A simplified accounting method that only records transactions when cash changes hands, as opposed to when the transaction is accrued.
Cash Equivalents
Highly liquid investments which are short term and convertible into cash (e.g. treasury bills or money market investments).
Cash Flow
The network influence of cash in and out of a business, which show liquidity and operational efficiency.
Cash Flow Statement
A financial statement that notes cash numbers coming into the company and going out of the company over a particular period of time, this shows insight on liquidity and the financial health of the company.
Chart of Accounts
Completed Procedure Workflow A formalized list of all accounts a business uses to record transactions in its accounting system.
Closing Entries
Accounting entries made at the end of a period to transfer accounts balances from a temporary account to a permanent account, for example revenue and expenses accounts.
Cost Accounting
A technique used to record, analyze and monitor all expenses associated with the production of goods or the provision of services.
Cost of Goods Sold (COGS)
Materials and labor-in material cost, the direct expenses for the manufacturing of products or the occurrence of providing of services.
Credit Entries
Accounting entries representing increases in liabilities, equity or decreases in assets or expenses, which are written on the right-hand side of a ledger.
Creditors
Persons or organizations that a company owes money to for goods or services provided.
Current Assets
Assets that are expected to be turned into cash or used within one year like cash, inventory and receivables;
Current Liabilities
Obligation that needs to be paid for within one year by a company, also called an accounts payable and short only loan.
Current Ratio
You must have a financial measure to compare current assets to current liabilities to determine short-term liquidity.
Debenture
A long-term debt instrument issued by a company that has not been secured by physical assets but relies on the credit-worthiness of the company.
Debit Entries
Bookkeeping entries that either increase dividends or disbursements or decrease liabilities or equity and are credited on the left on a ledger.
Debt
Money a business needs to replace that a business borrows with the expectation that the money will need to be given back, typically with interest, and includes loans, bonds, and credit lines.
Deferred Income
Suppose revenue is received before goods or services are delivered and is recorded as a liability until the obligation is carried out this is known as deferred payment.
Deferred Tax
A tax liability or asset that is recognized in the financial statements because of differences in the timing of accounting and tax reporting.
Depreciation
If something is a tangible asset, the systematic allocation of the cost of the asset throughout its life to account for wear and use, or obsolescence.
Direct Costs
Expenses that are directly connected to the production of goods or services, eg. raw materials and labor.
Dividends
Portions of a company's profits paid to shareholders as a return for their investment.
Double Entry Accounting
A system of accountancy that requires a credit made by one account to be offset by at least one debit made by another account so that the balance remains unchanged.
Drawings
Assets or money taken out by the owner for personal use resulting in the decline of the owner's equity in the business.
Earnings Before Interest and Taxes (EBIT)
A measure of profitability calculated as revenue less operating, excluding interest and tax.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
Profitability measure that displays earnings prior to accounting for interest, taxes, depreciation and amortization.
Equity
The residual interest in the assets of a company after deducting the value of liabilities, this represents the value of ownership.
Expense Tracking
Monitoring and recording all the business related expenditures so that financial control can be maintained and budgets can be planned.
Expenses
Costs which are incurred to function a business such as rent, salaries, utilities and other costs incurred in the operation of the business.
Factoring
The practice of selling accounts receivable to a third party at a discount in order to get immediate cash.
Financial Accounting
The method of recording, summation and reporting of financial transaction so as to produce correct financial statements.
Financial Records
Complete documents that show a business's income and expenses, assets and liabilities.
Fixed Assets
Long term tangible resources, i.e. machinery or property, which are used in business operations and cannot be converted to cash easily.
Fixed Costs
Business Expenses Containes that remain the same regardless of production and sales levels, such as rent, salaries, insurance, etc.
General Ledger
The primary record of all the financial transactions which are used to make financial statements and track the account balance.
Goodwill
An intangible asset that is the strength of a company's reputation, brand value and customer relationships.
Gross Income
Total income of a business earned before subtracting anything out of the income such as expenses, taxes, or anything else.
Gross Profit
Revenue after deducting cost of goods sold as a profit from core operations
Income Statement
A financial report which summarises revenues, expenses and net profit or loss for a set period of time.
Indirect Costs
Expenses that are not directly associated with the production but, rather, necessary to run the business (e.g. administrative salaries or rent).
Interest Expense
Expenses as recorded on the income statement that are paid for borrowing money.
Internal Audit
A systematic review performed within an enterprise with the goal of being accurate, compliant and having effective internal controls.
Journal
A chronological record of all the financial transactions used as the basis for posting to the ledgers.
Liabilities
Financial commitments in money that is owed to other parties such as loans, accounts payable and taxes payable.
Liquidity
The ability of a business to translate assets into cash in an expeditious manner for the purpose of paying its purchases of short term requirements.
Loan
Funds borrowed by a business which should be repaid with interest for an agreed period of time.
Long-Term Liabilities
Obligations (payable for more than 1 year), for example, bonds, mortgages and long-term loans.
Net Income
The total profit after subtracting all expenses, taxes and costs from total revenue and represents the bottom line of a business.
Net Profit
Revenue after deducting all expenditures for the business, taxes, and other costs indicating the general profitability of the business.
Nominal Ledger
Another term of the general ledger where all financial transactions of a business are systematically recorded.
Operating Costs
Expenses needed to operate day-to-day, such as rent, energy and salaries.
Operating Profit
Profit for basic business operations without interest and tax costs.
Overdraft
A banking facility which provides the withdrawal of balances in an account, beyond the amount of the deposit in the account up to the amount allowed by the bank.
Overheads
On-going business costs that are not directly linked to production, such as rent, bills, and other administrative costs.
Owner's Equity
The amount of the business assets owned by the owner after settling the liabilities is the net worth.
Payroll
The total compensation (including wages, salaries and benefits) paid to the employees for their services.
Petty Cash
Small reserve of cash kept for use in minor, day-to-day expenses, e.g., office supplies.
Post-Dated Cheques
Cheques that are issued with a future date, and could not be cashed prior to that specified date.
Prepaid Expenses
Advances of payments for goods or services recorded as assets on receipt of the benefit.
Profit
Financial gain netted when the total revenue exceeds the total costs and expenses.
Profit and Loss Statement
A report showing revenue, expenses, and income or loss over some period of time.
Profit Margin
A measurement of the percentage of the revenue that has remained after expenses have been subtracted, which is measured as profit.
Profit Reports
Financial statements that summarize earnings and profitability of a certain period of time.
Reconciliation
The act or an instance of comparing and checking two sets of financial records to ensure consistency and accuracy.
Retained Earnings
Profits left inside the business to be reinvested in business or used to pay off debt instead of being given out as dividends.
Revenue
Total income earned from core business operations before taking into consideration any cost or expense.
Shareholders' Equity
The ownership value in a company, as per formula, total assets minus total liabilities.
Suspense Account
A temporary account that's used to record meaningless or pending transactions so that they can be classified accordingly.
Tax Deduction at Source (TDS)
A system in which tax is deducted from certain payments at their origin and sent in to the government.
Tax Liability
In other words, the "total tax owed on a business or individual to the government owing to income, transactions or some other taxable event".
Trial Balance
A report showing all the ledger balances in order to check that debits are equal to credits.
Unearned Revenue
Money received for goods or services not yet delivered included as a liability until earned.
Unrealized Gain or Loss
Changes in the value of investments that have not been sold, but show possible but not completed value gains or losses.
Working Capital
The distribution between the current assets and current liabilities that reflect the short-term financial health of a company.
Write-Off
The removal of an uncollectible debt or asset from the books in order to reduce the financial impact such debt or asset has on the business.
Yield
The income from an investment, usually expressed in percentages of the original cost of investment.
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