Accounts Payable: When a business receives a bill for goods delivered or services performed from its vendors, the amount of money owed to the vendors against all outstanding bills, is the business’ accounts payable.
Accounts Receivable: When the business invoices a customer for goods delivered or services performed, the amount of money owed by customers against all outstanding invoices, is the business’ accounts receivable.
Accrual Basis of Accounting: Income and expenses are recorded when they occur, not when cash is paid or received. For example, income is booked when an invoice is issued, regardless if a payment was received; and expense is booked when a bill is received, regardless if a payment was sent.
Accrued Expense: It is a liability that incurred for the company, but was not yet billed by the vendor. For example, company’s telephone expense for January, may not be billed by the vendor until early February. The telephone expense will be booked as accrued expense for the month of January, even if it is billed in February.
Accumulated Amortization: Is an intangible asset negative balance account that tracks the cumulative amortization expense accumulation for intangible assets.
Accumulated Depreciation: Is a fixed asset negative balance account that tracks the cumulative depreciation expense accumulation for fixed assets.
Balance Sheet statement: A balance sheet is one of the most common financial reports, which follows the basic accounting equation: Assets (what the business owns) equal liabilities (what the business owes) plus owners’ equity in the business.
Cash Basis of Accounting: Income and expenses are recorded when cash is paid or received, not when they actually occur. For example, income is booked when a payment is received, regardless of when the invoice was issued; and expense is booked when a payment is sent, regardless of when the bill is received.
Cash Flow Statement: A cash flow statement measures the business increase or decrease in cash over a certain period. It takes the business’ profit or loss for the year, and adjusts it for other non-cash items (like depreciation and amortization expense), or items not listed on the profit and loss but do affect cash (like a prepaid deposit or principal payments on a loan).
Cost of Goods Sold: Are the expenses that are directly related to the production of goods delivered or services performed by the company.
Fixed Assets: Are any physical assets that the business owns, and they are generally for long term use. For example, machinery and equipment, furniture and fixtures, building and land, and etc.
Intangible Assets: Are any non-physical asset that the business owns. For Example, patents, copyrights, goodwill, and etc.
Inventory: It is a stock of goods that the business buys and sells to generate business income, the goods become inventory when they are bought, and leave inventory when they are sold.
Journal Entry: It is a manual entry booked by the accountant or bookkeeper to reclassify or adjust two or more separate company accounts. For example, in the end of the year the accountant can book a journal entry to record depreciation or amortization expense for the client’s assets.
Owner Loans: Amount of money that the business owner loans to the business on a cumulative basis.
Prepaid Expense: It is an asset for the company, which is created when a company prepays an expense in advance, before it is due. For example, company prepays April’s rent, in the end of March.
Profit and loss statement: A profit and loss is one of the most common financial reports. The report lists revenues minus expenses, which shows business net income (bottom line) for a specified period of time.
Undeposited Funds: It is an account that tracks payments received from clients, which are not deposited in the bank account yet. Once all payments received are deposited in the bank, this account value should be zero.
Accounts Payable: When a business receives a bill for goods delivered or services performed from its vendors, the amount of money owed to the vendors against all outstanding bills, is the business’ accounts payable.
Accounts Receivable: When the business invoices a customer for goods delivered or services performed, the amount of money owed by customers against all outstanding invoices, is the business’ accounts receivable.
Accrual Basis of Accounting: Income and expenses are recorded when they occur, not when cash is paid or received. For example, income is booked when an invoice is issued, regardless if a payment was received; and expense is booked when a bill is received, regardless if a payment was sent.
Accrued Expense: It is a liability that incurred for the company, but was not yet billed by the vendor. For example, company’s telephone expense for January, may not be billed by the vendor until early February. The telephone expense will be booked as accrued expense for the month of January, even if it is billed in February.
Accumulated Amortization: Is an intangible asset negative balance account that tracks the cumulative amortization expense accumulation for intangible assets.
Accumulated Depreciation: Is a fixed asset negative balance account that tracks the cumulative depreciation expense accumulation for fixed assets.
Balance Sheet statement: A balance sheet is one of the most common financial reports, which follows the basic accounting equation: Assets (what the business owns) equal liabilities (what the business owes) plus owners’ equity in the business.
Cash Basis of Accounting: Income and expenses are recorded when cash is paid or received, not when they actually occur. For example, income is booked when a payment is received, regardless of when the invoice was issued; and expense is booked when a payment is sent, regardless of when the bill is received.
Cash Flow Statement: A cash flow statement measures the business increase or decrease in cash over a certain period. It takes the business’ profit or loss for the year, and adjusts it for other non-cash items (like depreciation and amortization expense), or items not listed on the profit and loss but do affect cash (like a prepaid deposit or principal payments on a loan).
Cost of Goods Sold: Are the expenses that are directly related to the production of goods delivered or services performed by the company.
Fixed Assets: Are any physical assets that the business owns, and they are generally for long term use. For example, machinery and equipment, furniture and fixtures, building and land, and etc.
Intangible Assets: Are any non-physical asset that the business owns. For Example, patents, copyrights, goodwill, and etc.
Inventory: It is a stock of goods that the business buys and sells to generate business income, the goods become inventory when they are bought, and leave inventory when they are sold.
Journal Entry: It is a manual entry booked by the accountant or bookkeeper to reclassify or adjust two or more separate company accounts. For example, in the end of the year the accountant can book a journal entry to record depreciation or amortization expense for the client’s assets.
Owner Loans: Amount of money that the business owner loans to the business on a cumulative basis.
Prepaid Expense: It is an asset for the company, which is created when a company prepays an expense in advance, before it is due. For example, company prepays April’s rent, in the end of March.
Profit and loss statement: A profit and loss is one of the most common financial reports. The report lists revenues minus expenses, which shows business net income (bottom line) for a specified period of time.
Undeposited Funds: It is an account that tracks payments received from clients, which are not deposited in the bank account yet. Once all payments received are deposited in the bank, this account value should be zero.