Feb 15, 2023 Author: Accounts Junction
If anybody wants to know better about bookkeeping they need to explore a few basic terms involved in it.
Whether you are a business owner, accounting student, or any other person, if you are dealing with accounting then know some important terms related to it.
There can be some confusing terms that can make it difficult for you to understand accounting terms.
However, by understanding some basic terms of accounting, you can get a better level of confidence in different accounting statements or pursue a career in it.
If you are a business owner then it is not necessary for you to be a master in accounts for growing business. Yes, you need to know basic accounting terms to understand different accounting statements.
What are some basic bookkeeping terms every bookkeeper must know?
It is very important to know basic accounting terms who want to make their career in accounting.
Here is the list of the top 25 bookkeeping terms every beginner should know:
1. Accounting Period
This is one of the most basic terms of accounting which is the time period for which the tracking of the financial information of the organization is done.
2. Accrual Basis
The accrual basis of accounting is basically recording the income when it is actually earned and expenses when it actually happens.
3. Asset
Any tangible or intangible value owned by the company is considered an asset.
4. Accounts receivables
Accounts receivables are the money owed to your small business from others for the goods or services provided by you.
5. Accounts payables
Accounts payable is owed by you to others for the goods or services taken by you.
6. Balance sheet
It is a detailed report about the financial situation of your business.
7. Bookkeeping
Bookkeeping is one of the accounting terms that records all the financial records in the business.
8. Budget
A budget is the estimate of the financial plan regarding the total money spent and earn during the upcoming financial year.
9. Cashflow
The process through which the money comes in and goes out of the business organization is cash flow.
10. Capital
The money that belongs to the business owner is called capital.
11. Creditors
The businesses or people your company owes money to.
12. Debtors
The business or debtor who owes money to you.
13. Depreciation
It is the money that reduces over time for any of the business assets.
14. Financial statements
It is the statement that shows the financial aspects of the business and it helps to understand the taxes that need to be paid.
15. Income statement
It is the statement that outlines the financial activity showing the sales, expenses, and costs of the business over a certain period.
16. Interim reports
These are the financial reports which are made at the end of the financial year.
17. Liabilities
Liabilities are all the debts of the company like unpaid bills and loans.
18. Net Profit
This is the actual profit of the business which is calculated by deducting the expenses from the gross profit.
19. Net Income
This is another basic accounting term that shows the total profit or earnings done by the company.
20. Overheads
These are the small expenses of the company like wages, rent, phone bills, etc. which are mostly paid on a day-to-day basis.
21. Payroll
It is the method of making the payment to the employees of the company including all aspects related to it.
22. Profit & Loss
This is the financial reports which show the expenses and revenue of the business over a period.
23. Reconciliation
Comparing the two sets of records of cash book and bank account to ensure proper finances.
24. Sales Ledger
A record of all the sales done by the company along with customer information.
25. Turnover
The total value gained by the company by selling goods or services.
Final Thoughts
These are some of the basic terms of accounting that every bookkeeper must know properly.
Accounts Junction provides outsourced accounting services for the business. They have experts who have worked with different businesses across the world.
As they are well-equipped with all accounting tools, they can optimize the work. Accounts Junction is a well-known accounting service-providing agency across the globe.
