Accounting Glossary – A short notes

This blog helps you to understand few crucial terms used in accounts. This would help the beginners to improve their expertise in accounting. 

  • Accounting Equation 

             It is Liabilities + Capital = Assets. It is a widely known accounting equation. This has been created on the basis of a balance sheet and double entry accounting.

  • Accounting Training 

             Training to set up a financial tracking system is widely called as “Accounting Training”. The training includes monitoring the process of financial transactions and explaining the financial statement for management. The training should explain you about the general ledger and the financial statement format.

  • Accounts Payable

             Accounts Payable is the current liability. Its represents the amount payable (to be paid) by a business to a creditor for the service purchased on open account. Open account is nothing but getting the amount or service without any evidence or written notes. Accounts Payable is also called as “A/P” . 

  • Accounts Receivable

             Accounts Receivable is direct opposite to Accounts Payable. Here, the customer or employees owes money for the services purchased from the company on open account. It can be called as “A/R”. They are the amount owed by the customer from the company for the product or service purchased. 

  • Accrual Basis

             It is the practice of keeping records. Here, the income will be recorded when earned and the expenses will be recorded when spent even if we may not received the cash. 

  • Bad Debts

             They are the due amount on the open account that has been determined as uncollectible. 

  • Bank Reconciliation

             Bank Reconciliation is verifying the company’s checkbook comparing with the entries on the bank statement. It includes the verification of the depositor’s checkbook balance and the bank statement balance. 

  • Bookkeeping

             The practice of systematic recording of transaction is known as Bookkeeping. It starts with recording all the entries and ends with preparing the financial statements. Many accounting outsourcing firms are providing bookkeeping services. 

  • Liabilities

             Liabilities are the amount owes by the company to its creditors. Examples of liabilities are accounts payable, payroll taxes payable, rent payable, income tax payable. 

  • LIFO

             The abbreviation for LIFO is Last In, First Out. It’s a method of valuating the inventory. i.e., the last items entered into inventory should be considered the first item out. 

  • Solvency

             Solvency is the long term ability to meet all the financial obligations of a company. When a company failed to meet all its financial obligations, it’s become insolvent.

 Hope this would have helped you to identify the synonyms of few accounting terms. Remote accounting services are available to help you with all your accounting needs.