Accounting - process of identifying, measuring, and reporting financial information of an entity
Accounting Equation - assets = liabilities + equity
Accounts Payable - money owed to creditors, vendors, etc.
Accounts Receivable - money owed to a business, i.e. credit sales
Accrual Accounting - a method in which income is recorded when it is earned and expenses are recorded when they are incurred, all independent of cash flow
Accruals - a list of expenses that have been incurred and expensed, but not paid or a list of sales that have been completed, but not yet billed
Amortization – gradual reduction of amounts in an account over time, either assets or liabilities
Asset - property with a cash value that is owned by a business or individual
Audit Trail – a record of every transaction, when it was done, by whom and where, used by auditors when validating the financial statement
Auditors – third party accountants who review an entity’s financial statements for accuracy and provide a statement to that effect
Balance Sheet - summary of a company's financial status, including assets, liabilities, and equity
Bookkeeping - recording financial information
Budgeting – the process of assigning forecasted income and expenses to accounts, which amounts will be compared to actual income and expense for analysis of variances
Capital Stock – found in the equity portion of the balance sheet describing the number of shares sold to shareholders at a predetermined value per share, also called “common stock” or “preferred stock”
Capital Surplus – found in the equity portion of the balance sheet accounting for the amount shareholders paid that is greater or lesser than the “capital stock” amount
Capitalized Expense – expenses that are accumulated, not expensed as incurred, to be amortized over a period of time; i.e. the development cost of a new product
Chart of Accounts - a listing of a company's accounts and their corresponding numbers
Cash-Basis Accounting - a method in which income and expenses are recorded when they are paid.
Cash Flow - a summary of cash received and disbursed showing the beginning and ending amounts
Closing the Books/Year End Closing – the process of reversing the income and expense for a fiscal or calendar year and netting the amount into “retained earnings”
Cost Accounting - a type of accounting that focuses on recording, defining, and reporting costs associated with specific operating functions
Credit - an account entry with a negative value for assets, and positive value for liabilities and equity.
Debit - an account entry with a positive value for assets, and negative value for liabilities and equity.
Departmental Accounting – separating operating divisions into their own sub entities on the income statement, showing individual income, expenses, and net profit by entity
Depreciation - recognizing the decrease in the value of an asset due to age and use
Dividends – amounts paid to shareholders out of current or retained earnings
Double-Entry Bookkeeping - system of accounting in which every transaction has a corresponding positive and negative entry (debits and credits)
Equity - money owed to the owner or owners of a company, also known as "owner's equity"
