Accounting Dictionary

1. General Accounting Terms Account: A record in which transactions are recorded. Accounts Payable: Amounts owed by a company to suppliers for goods and services received. Accounts Receivable: Amounts owed to a business by customers for goods or services delivered. Assets: Resources owned by a company, such as cash, property, and equipment. Balance Sheet: A financial statement showing a company's assets, liabilities, and shareholders' equity. Capital: Financial resources or assets invested in a business. 2. Financial Statements Income Statement: A financial report showing a company’s revenues, expenses, and profits over a specific period. Cash Flow Statement: A report showing the inflow and outflow of cash in a business. Statement of Retained Earnings: A report that shows the changes in retained earnings from one period to the next. 3. Types of Accounts Revenue Account: Accounts tracking the income generated from business operations. Expense Account: Accounts recording the costs incurred in the process of earning revenue. Equity Account: Accounts related to owner’s equity or shareholders’ equity in a business. 4. Accounting Principles GAAP (Generally Accepted Accounting Principles): A set of standard accounting principles used in the U.S. IFRS (International Financial Reporting Standards): A global set of accounting standards. Accrual Accounting: The method of accounting that recognizes revenues and expenses when they occur, regardless of when cash is received or paid. Cash Accounting: Accounting method that recognizes revenues and expenses when cash is received or paid. 5. Taxation Terms Taxable Income: Income on which taxes are calculated. Tax Deduction: An expense that can be deducted from taxable income. Tax Credit: A direct reduction in the amount of tax owed. 6. Audit and Internal Controls Audit: The examination of a company’s financial statements and accounting records to ensure accuracy and compliance. Internal Control: Procedures and processes to ensure the integrity of financial and accounting information. 7. Cost Accounting Fixed Costs: Costs that do not change with the level of production. Variable Costs: Costs that vary depending on the production level. Break-even Point: The point at which total revenues equal total costs, resulting in no profit or loss. 8. Managerial Accounting Budgeting: The process of planning and allocating financial resources for the business. Cost-Volume-Profit Analysis: A tool used to understand the relationship between costs, sales volume, and profit. 9. Banking and Finance Loan Amortization: The gradual repayment of a loan over time through regular payments. Interest: The cost of borrowing money, usually expressed as a percentage. Dividends: Payments made to shareholders from a company’s profits. 10. Legal and Regulatory Terms Corporation: A legal entity that is separate from its owners, offering limited liability protection. Securities and Exchange Commission (SEC): A U.S. government agency that regulates securities markets.