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 Here You'll Find A Complete Glossary, All Commonly Used
Accounting & Bookkeeping Terms - Forms - Definitions.

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A


Account

In an accounting or bookkeeping system this would be a record summarizing all the information pertaining to a single item in the accounting equation.

Account Balance

The actual amount in the account.

Accounting Equation

This equation would show the relationship among all assets, liabilities, and owners equity.

Accounting Periods (fiscal periods)

Usually done in a 3 month increment, this would be the length of time in which a business would summarize and report any financial information.

Account Number

The number assigned to an account.

Assets

Anything of value that is owned.

Accounts Payable

Commonly used for vendor accounts.

Accounts Payable Ledger

A subsidiary ledger containing only accounts for vendors (refer to vendor). This ledger would commonly list any items purchased or bought on account (a typical accounts payable ledger would have a column for vendor name, no, date of purchase, item name, a corresponding journal page no [post ref.]., a debit column, a credit column, & a credit balance column).

Accounts Receivable

Commonly used for charge customers.


Accounts Receivable Ledger

A subsidiary ledger containing only those accounts of any charge customers (a typical accounts receivable ledger would include a column for customer name, the name of the item(s) purchased, a corresponding journal page no [post ref]., a debit column, a credit column and a debit balance column).

Adjustments

Changes recorded on a worksheet to update any general ledger accounts at the end of any fiscal period.

Automated Accounting System

Computer based, this will include a collection of programs designed for use in any computerized accounting procedures.


B



Balance Sheet

This financial statement will report assets, liabilities, and owner's equity on a specific date.

Batch

A group of journal entries.


C



Capital (working capital)

This account will summarize the owner's equity in a business.

Cash Sale

A sale in which cash only is received for the total amount of the sale, at the time of the sale.

Charge Sale (sale on account)

A recorded sale in which the cash will be received at a later date.

Chart of Accounts

A list of all accounts used by any individual business.

Closing Entries

Journal entries that will be used to prepare any temporary accounts for a new fiscal period.

Controlling Account

Typically used in correlation to a subsidiary ledger, this account in a general ledger will summarize all the accounts in that subsidiary ledger (this would be for instance, the totals of any customer account balances, contained in that accounts receivable ledger).

Correcting Entry

A journal entry made to correct an error in the ledger.

Cost of Goods Sold (cost of merchandise)

Wholesale to retail, the price a business pays for the goods it purchases.

Cost of Merchandise Sold

This would be the total original price of all merchandise sold during a fiscal period.

Credit

Commonly used in an accounting or bookkeeping T account (For instance, left side debit would show increases as indicated and right side would show decreases [deductions or withdrawals] as indicated). For further clarification; refer to a T account.


D

Debit

An amount recorded on the left side of a T account
(refer to the above credit).

Double-Entry Accounting

The term used to refer to the recording of any credit or debit parts of a transaction.


E

Employee Earnings Record

This business form is used to record any details affecting any payments made to an employee.

Entry (journal entry)

Commonly used term for any information relating to any transaction recorded in a journal.

Equities

Financial rights to the assets of any business.

Expense (see owner's equity)

A decrease in owner's equity resulting from the operation of a business.


F

Face Amount

This would be the original amount of a note.

File Maintenance

This procedure is commonly used for arranging any accounts in a general ledger, assigning account numbers, and keeping those records current.


G

General Amount Column

Used in journaling accounts, this journal amount column would not be headed with any account title (these columns are generally either a debit or credit column).

General Ledger

A general ledger would contain all of the accounts needed to prepare any financial statements (accounts contained here would include any owner, assets, vendors, revenue and expense accounts).

Gross Earnings (total earnings)

This would be the total pay due to any employee for a pay period, before any deductions.

Gross Profit on Sales

This amount would be any revenue remaining after any cost of merchandise has been deducted.


I

Income Statement

Commonly used at the end of any fiscal period, this financial statement would show the revenue and expenses for that period.

Inventory

The actual amount of any goods on hand.

Invoice

This form would be used to describe the goods sold, the actual sold quantity, the individual retail price of each item, and then the total price (quantity x individual price = total amount sold).


J

Journal

This form is used for recording transactions in chronological order (a typical journal would include a date, account title, any general debits or credits, any sales credits, and any general cash debits or credits).

Journalizing

The actual recording of any transactions in a journal.


L



Ledger

This form would contain a group of accounts (typical accounts listed might include any assets such as cash, supplies or owner equity). Each account is listed separately; each independently separate ledger account would be assigned a number title (the cash account on a ledger sheet might for instance include a date, item name, reference no., debit & credit columns, then an ending balance with its own debit & credit columns).

Liability

This refers to any amount owed by a business.


M



Manual Accounting

This is an accounting or bookkeeping system in which all data is recorded and reported mostly by hand.

Markup

Any amount added to the cost of merchandise to establish the actual selling price.

Merchandise

Goods that any merchandising business purchases for resell.

Merchandise Inventory

The actual amount of goods that a business has on hand for resell to customers.

Merchandising Business

A business that purchases and sells goods.


N



Net Loss

The difference between total revenue and total expenses when total expenses are higher (for instance, +75.00[e] -50.00[r] would give you an = -$25.00).

Net Pay

The actual total earnings that an employee would receive after any payroll taxes or other deductions.

Nominal Account (temporary accounts)

Nominal accounts are used for information that will eventually be transferred to the owner's capital account (typically accounts used would be revenue, expense, and any owner's drawing accounts).


O



Owner's Equity

In a sole or partner-based proprietorship, this would be the amount remaining after the value of all liabilities is subtracted from the value of all assets.

Owner's Equity Statement

This financial statement commonly done at the end of any fiscal period, would summarize the changes in the owner's equity during that period.


P



Partner

Any member of any business partnership.

Partnership

A business in which any two or more persons are combining their assets and skills.

Pay Period

This would refer to any period in a salary payment.

Payroll

The total amount earned by all employees for a pay period.

Payroll Register

This business form is typically used to record any payroll information (a common example of a payroll register would include pay period dates, date of actual payment, employee name(s), marital status of each, no. of allowances [for a description refer to withholding allowance], earnings [regular, overtime and any totals], deductions [federal income tax, fica tax, health insurance, and any totals], net pay
[total earnings - deductions], check no).

Payroll Taxes

Taxes based on the payroll of any business (this is typically based on employee total earnings)

Permanent Accounts (real accounts)

These accounts are used to accumulate information from one fiscal period to the next (typical accounts included would be asset, liability, and any owner's capital accounts). The ending account balances for one fiscal period are typically the beginning account balances for the next fiscal period.

Petty Cash

This term refers to the amount of actual cash kept on hand (and recorded) for making any small payments.

Petty Cash Slip

This form is typically used to show proof of any petty cash payments.

Post-Closing Trial Balance

This trial balance is typically prepared after the closing entries have been posted (typically this would include any general ledger accounts [permanent accounts such as assets, liabilities, and owner's capital]).

Posting

The term used to refer to the transferring of any information from a journal entry to a ledger account.

Principal of a Note

The original amount of any note.

Profit (net income)

The difference between total revenue and total expenses when total revenue is higher ($75.00[r] - $50.00[e] = +$25.00).

Proprietorship

This term is commonly used to describe a business that is owned by one person (sole proprietorship).

Proving Cash

This is done to determine that the amount of cash agrees with the actual accounting or bookkeeping records.

Purchase Invoice (sales slip)

This form is commonly used as a source document for recording any purchase on account (a typical example of a customer invoice would include a customer name, address, date of purchase, an invoice no., terms [i.e. length of time allotted for payment, 30 days, 90 days...], account no., description of item purchased, quantity purchased, individual item selling price, and a total column
[individual item price x quantity]). Concept-Objective Evidence.

Purchase on Account

This transaction would be for merchandise that is purchased on account, to be paid for at a later date (refer to purchase invoice for an example).


R



Receipt

This business form is commonly used for giving written acknowledgement of any cash recieved.

Revenue

In an accounting or bookkeeping system this is used to show any increase in the owner's equity resulting from the operation of the business (typically when any cash is received from a sale, the total amount of assets and the owner's equity would be examples of accounts increased from this revenue).


S



Salary

The money paid for employee services.

Sale on Account (charge sale)

A sale for which cash will be received at a later date
(for an example, refer to invoice).

Sales Tax

A tax on any sales of merchandise or services.

Schedule of Accounts Receivable

A listing of any customer accounts, account balances, and a total amount due from all customers (for a term description of accounts receivable, refer to accounts receivable and accounts receivable ledger).

Schedule of Accounts Payable

A listing of vendor accounts, account balances, and the total amount due to all vendors (for a term description of accounts payable, refer to accounts payable and accounts payable ledger).

Service Business

This type of business will perform activities for a fee.

Sole Proprietorship

(refer to proprietorship)

Source Document

A business paper from which information is obtained for a journal entry.

Special Amount Column

This commonly refers to a journal amount column headed with an account title (for an example, refer to journal and journalizing).

Subsidiary Ledger

This ledger form will summarize a single general ledger account (for example, a typical subsidiary ledger for any accounts payable would contain only accounts for vendors from whom items are purchased or bought on account [i.e. individual subsidiary ledger meaning one ledger for accounts payable, accounts receivable...]).

Supporting Schedule (supplementary report)

This report is prepared for the sole purpose of giving details regarding an item on a principal financial statement (typically this would be prepared to accompany a balance sheet to be used in correlation with any accounts payable or accounts receivable).


T



T Account

An accounting device {T} used to analyze transactions (typically an example of this relationship to the accounting equation would be assets = liabilities + owner's equity [{T} left side representing any debits {assets =} and the right side representing any credits {liabilities + owner's equity}]).

Tax Base

The maximum amount of earnings on which a tax is calculated.

Terms of Sale

An agreement between a buyer and a seller about payment for merchandise (typically this would be recorded on a purchase invoice).

Total Earnings

This term refers to the total pay due to an employee before any deductions.

Transaction

This commonly refers to any business activity that would change assets, liabilities, or the owner's equity (this business activity is a typical example of when a T account would be used).

Trial Balance

This is recorded to show the proof of the equality of debits and credits in a general ledger.


V



Vendor

A business from which merchandise is purchased (typically this would include any wholesale merchandise and any supplies) or other assets are bought.


W



Withdrawal

A withdrawal in an accounting or bookkeeping system would be an asset taken out of a business, then recorded (such as company merchandise), for an owner's personal use.

Withholding Allowance

A deduction from any total earnings for each person legally supported by a taxpayer (used in payroll).

Worksheet

This columnar accounting form is commonly used to summarize the general ledger information that will be needed to prepare any financial statements (typically this would be used to separate general ledger accounts [debits must = credits], to bring general ledger accounts up to date, and then to separate the general ledger accounts according to the financial statements to be prepared).



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