In every industry, there are specific terms and phrases used for quick and precise communication. These words and expressions can be confusing to anyone who is not a part of the daily operations of a specific industry, and the bookkeeping and accounting business is no different. There are several terms that we use to talk about different procedures and accounting aspects for clear-cut communication.

To give you an understanding of the terms, acronyms, and phrases regularly used when availing of our services, 2 Bits A Dollar Bookkeeping & Tax Service has created this handy reference guide. Here we’ve covered different terms that will help you comprehend and speak to us about your accounting and bookkeeping needs effectively.

Basic accounting equation
That is Assets = Liabilities + Owner’s Equity.

Corporation
It is a business organized as a separate legal entity under state corporation law, having ownership divided into transferable shares of stock.

Cost principle
It is an accounting principle that states that companies should record assets at their cost.

Drawings
It is the withdrawal of cash or other assets from an unincorporated business for the personal use of the owner(s).

Economic entity assumption
It is an assumption that requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities.

Ethics
These are the standards of conduct by which one’s actions are judged as right or wrong, honest or dishonest, fair or not fair.

Expanded accounting equation
This is Assets = Liabilities + Owner’s Capital – Owner’s Drawings + Revenues – Expenses.

Expenses
These are the costs of assets consumed or services used in the process of earning revenue.

Income statement
It is a financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time.

International Accounting Standards Board (IASB)
It is an accounting standard-setting body that issues standards adopted by many countries outside of the United States.

Investments by owner
These are the assets an owner puts into the business.

Liabilities
These are creditor claims on total assets.

Monetary unit assumption
It is an assumption stating that companies include only transaction data in the accounting records that can be expressed in terms of money.

Net income
It is the amount by which revenues exceed expenses.

If you’re looking for accounting and bookkeeping services, reach out to the experts at

2 Bits A Dollar Bookkeeping & Tax Service. Our services are available to clients across Spicewood, Marble Falls, Llano, Tow, Burnet, Johnson City, Briarcliff, Leander, Liberty Hill, Jonestown, Lakeway, Bee Cave, Blanco, Austin, Dripping Springs, Driftwood, Cedar Park, Fredericksburg, Boerne, Wimberley, Lockhart, Georgetown, Round Rock, Round Top, Temple, Waco, Hilda, Bertram, Bandera, Round Mountain, and the Greater Austin Area. We provide comprehensive financial and professional services to individuals and businesses alike. We customize our services to match their requirements and ensure they can grow and manage their finances with ease.

To view our full list of services, please click here or get in touch with us here for more information.

A Glossary Of Accounting And Bookkeeping Terms - Part 2