A Glossary Of Accounting And Bookkeeping Terms - Part 3
For clean and efficient communication, every industry has its own language and terms. However, these words and phrases can be confusing to anyone who is not part of the daily operations of a specific industry, and the same applies to the accounting and bookkeeping sector.
To give you a rundown of the different terms, acronyms, and phrases regularly used when preparing your books, filing your accounts, and taxes, 2 Bits A Dollar Bookkeeping & Tax Service has created this handy reference guide. Here you’ll find valuable information to comprehend and communicate your needs effectively.
It is the amount by which expenses exceed revenues.
It is the ownership claim on total assets.
Owner’s equity statement
It is a financial statement that summarizes the changes in owner’s equity for a specific period of time.
It is a business owned by two or more persons associated as partners.
It is a business owned by one person.
It is the gross increase in owner’s equity resulting from business activities entered into for the purpose of earning income.
Sarbanes-Oxley Act of 2002 (SOX)
It is a law passed by Congress in 2002 intended to reduce unethical corporate behavior.
These are bonds with one maturity date (as opposed to serial bonds).
It is life insurance without a cash value.
It is an intangible asset that is reported at cost (or lower) on the balance sheet. It might consist of a name or a logo. Trademarks should be registered with the U.S. Patent and Trademark Office.
It is a listing of the accounts in the general ledger and each account’s balance in the appropriate debit or credit column. The total of the amounts in the debit column should equal the total of the amounts in the credit column.
It is a ratio consisting of an Income Statement Account balance divided by the Average Balance of a balance sheet account. For example, the inventory turnover is computed as follows: Cost of Goods Sold divided by the Average Inventory Balance. The Accounts Receivable turnover is Sales divided by the Average Accounts Receivable balance.
Unadjusted trial balance
It is an internal accounting report that is prepared before recording the adjusting entries. Its purpose is to verify that the total amount of debit balances in the general ledger accounts is equal to the total amount of credit balances.
It is a loan from a bank or other lenders for which the borrower is not required to pledge assets as collateral for the loan.
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