Accounting Dictionary

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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.