If you are new to the accounting world, then you may be looking for a quick and easy glossary to look through to extend your knowledge. Or if you’re looking for something simple to brush up your terminology memory, then this is the guide for you.
Accounting is the process of tracking and reporting all financial activities within a business. People tend to use accounting for access to their financial performance and growth, it is a very useful resource for companies to complete all tax obligations on time and without errors.
This is a brief glossary of the terminology you must know within this field.
An accounting period will define the length of time that is used to complete a financial document or task. This can be measured in calendar years, quarterly, or each month. Each accounting period will complete one accounting cycle. One accounting cycle is measured using an eight-step process to be able to easily track transactions during that particular time.
An accrual, also known as an ACCR, is a record of revenue or expense that has been earned or incurred but has not yet been recorded in the official company financial statements.
Assets are the resources that contain some form of value that a business will own or have control over. Assets come in many different shapes and sizes and will depend on the client you are working with.
A balance sheet is a basic financial statement that will include the financial position that the business is in. For example, a basic balance sheet will include assets, liabilities, and owner’s equity. This will be frequently updated to keep track of the business’s growth and if there are any concerns.
Capital within accounting refers to any resource that a business can use to their advantage to create revenue. However, there is another way to use the term ‘Capital’ and that would be used to name the level of ownership of investments within the business.
Cash flow is one of the first terms that you will learn when studying business, accounting, and this field. It means to describe the balance of funds that will go in and out of a business during a certain time. As part of an accountant’s role, you can track the cash flow on a cash flow statement.
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