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Accounting

Terms

Accounting: It is a systematic recordation of the financial transaction of a business.

Accounts Payable: It is an aggregate amount of an entity's short-term obligations to pay suppliers for products and services which the entity purchases on credit.

Accounts Receivable: Short-term amounts due from buyers to a seller who have purchased goods or services from the seller on credit. 

Asset: It is an item of economic value that is expected to yield a benefit to the owning entity in future periods. 

Balance Sheet: It is a report that summarizes all of an entity's assets, liabilities, and equity as a given point in time. 

Capital: Is is then investment by an entity's owners in a business, plus the impact of any accumulated grains or losses. This may be considered the residual wealth of a business after all of its liabilities have been settled. 

Cash Flow: Is the net amount of cash that an entity receives and disbursers during a period time. A positive level of cash flow must be maintained for an entity to remain in business. 

Certified Public Accountant: Is an accountant who has passed all parts of the CPA examination, as administrated by the American Institute of Certified Public Accountants, and who has completed all additional work and educational requirements of their local state accounting regulator agencies. A CPA is authorized to render an opinion on the fairness of a client's financial statements. 

Cost of Goods Sold: It is the accumulated total of all costs used to create a product or service, which has been sold. These costs fall into the general sub-categories of direct labor, materials, and overhead. 

Credit: It is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account. It is positioned to the right in an accounting entry. 

Expense: It is the reduction in value of an asset as it is used to generate revenue.

General Ledger: It is the master set of accounts that summarize all transactions occurring within an entity. There may be a subsidiary set of ledgers that summarize into the general ledger.

Liability: It is a legal binding obligation payable to another entity. Liabilities are incurred in order to fund the ongoing activities of a business. 

Net Income: It is the excess of revenues over expenses. This measurement is one of the key indicators of company profitability, along with gross margin and before-tax income. 

Owners Equity: It is the total assets of an entity, minus its total liabilities. This represents the capital theoretically. 

Present Value: Is the current worth of cash to be received in the future with one or more payments, which has been at a market rate of interest.

Profit: Is the positive amount remaining after subtracting expenses incurred from revenues generated over designated period of time. 

Return on Investment: Is a measurement designed to evaluation the ability of an investment to generate income.

(All terms & definitions came from Accountingtools.com)