Learn the Language of Bookkeeping – 13 Lucky Terms You Need to Know 

Are you intimidated by “Accountant speak”?  Have you avoided looking at your accounts because it’s intimidating? Here are some helpful definitions of the most commonly used Accounting terms.  Click here or here for websites with more detailed definitions.

Accounting - A method of recording, classifying, and summarizing financial information for your business

Asset - What your company owns or has rights to (ex. Accounts Receivable is an asset!)

Balance Sheet - A statement that details assets, corresponding liabilities on those assets and equity or retained earnings

Budget - Plan that formulates a company’s goals and objectives in financial terms

Cash Flow - Sources of cash coming into the company and leaving the company                      

Chart of Accounts - A complete list that classifies every account you use and serves as a sorting tool

Closing Entries - Journal entries used to transfer balances to revenue, expenses or retained earnings at the end of a fiscal year to reflect actuals

Equity - The resulting value when liabilities are subtracted from assets

FASB - Financial Accounting Standards Board - Responsible for accounting standards in the US              

Liability - Obligations of a business that they owe to other parties – Accounts payable, loans, etc.

Liquidity - Ability to convert assets into cash quickly to meet short term obligations

Profit & Loss (P&L) - A statement that shows net profit after expenses

Taxes - The only other certainty besides death :)

We can't promise that these terms will bring you luck in other areas, such as catching fish, but peace of mind about your books will give you more time to enjoy the great outdoors.

So, do you feel smarter now? Try out a quiz, a crossword puzzle, or a word scramble and see which other terms you can add to your vocabulary!

Lynn Talbott, MBA, PHR, has over 20 years’ experience consulting with entrepreneurs of small to mid-sized businesses in the HR and office management capacity.  Her specialty is Office/Human Resource Manager coaching and training and finding practical solutions for bookkeeping errors and HR blunders.  Lynn has helped manage over 50 business start-ups and many of those companies continue to rely on her expertise today as they continue to grow.