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 :)
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.