Basic Accounting Terms
Basic Accounting Terms 2016What are the Basic Accounting Terms:Basic Accounting Terms are very important for Accounting's beginner tounderstand it. before starts learning accounting one must read and learn allthe terms to understand accounting well.Basic Accounting terminologies includes all those important termsBasic Accounting Terms:The general and common accounting terms which are most important andwidely used while learning accounting are as follow,List of key Accounting Terms;AAccountant:The First Accounting Terms in my list is Accountant. The person whocategories and pass financial data to a bookkeeping system or in anyaccounting information system, People often thinks that bookkeeper andaccountant is the same thing. Similarly Accountant refers to the personwho makes the annual financial statements and tax calculations.Account:It is device, which contains a systematic record of increase or decrease in anitem during a certain particular period of time.Account Receivable /Debtor:A person to who goods are sold on credit by a business organization iscalled account receivable or debtor.Account Payable / Creditor:http://www.commercepk.comSalman QureshiPage 1
Basic Accounting Terms 2016A person from whom a business organization or individual purchasesgoods on credit is called creditor.Assets:The basic accounting terms Assets means anything valuable possessed by afirm with the following three features qualifies as assets.1. The legal title of ownership2. Right to use3. Right to sale/dispose offAmortization:The intangible assets whose property right is obtained for specific period oftime, diminishes in value with passage of time this called as amortization.The example are patient rights, copy right, goodwill etc similarly, thevalue of leasehold property also decreases with the passage of time.BBusiness:The Basic Accounting Terms in my list is Business. Business includes anyactivity undertaken for the purpose of earning profits such as buying andselling of goods, rendering services and manufacturing goods.The business organization which are encased in buying and selling ofgoods merchandise are called merchandising or trading concerns, whilethose, which are engaged in providing any services are called concerns.The business organizations engaged in producing goods are called asmanufacturing concerns.Bookkeeper:A trained and qualified person who collects, records and report on thefinancial transactions carried out by a business is called Bookkeeper.http://www.commercepk.comSalman QureshiPage 2
Basic Accounting Terms 2016Note there is a difference between bookkeeper and Accountant weexplained in another separate topic Accountant Vs BookkeeperBalance:The balance means the remaining. It may be balance of cash, goods,accounts receivable and accounts payable which is carried down/forwardfor next period for treatment. The difference between two sides of anaccount is called balance.Bankrupt:A company inability to pays debts is called bankrupt or insolvent.Bank:The bank is financial institution where person/businesses deposit theirincomes and from which they pay their bills. Banks provide different kindof services and business advice as well. and also provide advances loans tobusinesses for development.Budget:The budget is a financial plan in which a business decides what it estimatesit will earn in the year ahead, where these estimated will be spend, andthen comparing/checking the actual figures and budgeted figures.Bad Debts/ Uncollectables:The amount which cannot be received from debtors is called bad debts.Balance Sheet:The last but not the least Basic Accounting Terms in my list is Balancesheet represents the financial position of the firm on the certain fixed date.Usually at the closing of the financial period. All the assets possessed bythe firm are written on one side and equities on the other side. Both thehttp://www.commercepk.comSalman QureshiPage 3
Basic Accounting Terms 2016assets and the equities are grouped under various classifications. Both thesides are equal.Basic Accounting Terms list is very important to understand before startlearning accounting.CChart of AccountsChart of Accounts is a listing of all accounts used in the general ledger,usually organized in order by account number. The accounts are usuallynumeric, but can also be alphabetic or alphanumeric. The accountnumbering system is used by the accounting software to aggregateinformation into an entity’s financial statements.Note: we explain char of Accounts in separate topic go here: Chart ofAccountsCash Memo:Any written proof evidence for the goods purchased from a particularseller is called cash memo.Cash Discount:A discount, which allowed or received at the time of cash payment oncredit sale or purchase is called cash discount. It has two types.1. Discount received2. Discount allowed.Commission:Remuneration for services performed by one person to another normallyon the percentage basic is called commission.Cash Book:http://www.commercepk.comSalman QureshiPage 4
Basic Accounting Terms 2016A book of original entries in which all cash receipt and payments arerecorded as is called cash book.It has three types.1. Single column cash book2. Two column cash book3. Three column cash bookCash Flow: Total amount of money being transferred into and out of abusiness, (e.g sales, manufacturing, etc.)Cost of Goods Sold : It is the accumulated total of all costs used to create aproduct or service, which has been sold. These costs fall into the generalsub categories of direct labor, materials, and overhead.DDrawings:The cash or commodities withdraw by the owner for his personal usesfrom business are known as drawings.E“Equation”:This is Basic accounting Terms. The total assets is always equal to totalliabilities plus owner equity this is basic accounting equationExpenses:To active the objectives of business certain payments or obligation areexpenses of business.The examples of such expenses are carriage, freight, cartage, salaries, rent,advertisement etc.http://www.commercepk.comSalman QureshiPage 5
Basic Accounting Terms 2016Equities:The rights possessed by owner or outsiders against the assets are called asequities.These equities are further divided into two categories:1. Owners’ Equity:It is the capital inverted by the proprietor of thebusiness.It is the claim of the owners on the assets of the business organization It isalso internal equities or owners fund.1. Liabilities: It us the claim of the outsiders against the assets of theenterprise. The liabilities are also called the external equities.FFinancial Statements:The basic accounting term “financial statements” means that the statementsshows the financial positions of a business organization after a year arecalled Financial Statements.GGAAP: This accounting terms is very frequently used; It stands forGenerally Accepted Accounting principles; A set of rules and guidelinesdeveloped by the accounting industry for companies to follow whenreporting financial data.HHolding gain:Againthathappensbyholdinganasset.For instance, if a firm bought land for Rs.300, 000 many years ago andtoday the firm continues to hold the land and its value is now Rs.475, 000,http://www.commercepk.comSalman QureshiPage 6
Basic Accounting Terms 2016the company has a holding gain of Rs.175, 000. Though, the companycannot record the holding gain on its financial statements because of thecost principle and the revenue recognition principle. On the other hand, ifthe company sells the land for Rs.475, 000 a holding gain of Rs.175, 000 willappear on its income statement as the company also records the Rs.475, 000on its balance sheet and removes the land's original cost of Rs.300, 000.IIncome Statements:One of the major objectives of accounting is to know the results of thebusiness. This means that profit earned or loss suffered is calculated at theend of accounting period. For this purpose a statement is prepared whereall the incomes of the period are added and all the expenses of that periodare deducted.This statement is called as “Income Statements“.Invoice:A written evidence/ document given by the seller to the buyer for creditsale of goods is called invoice.JJob Order Costing:Job order costing is a cost accounting system in which direct costs aretraced and indirect costs are allocated to unique and distinct jobs instead ofdepartments. It is appropriate for businesses that provide non-uniformcustomizedproductsandservices.Note: I have written a separate article on Job Order CostKkitinghttp://www.commercepk.comSalman QureshiPage 7
Basic Accounting Terms 2016LLoss:If the expenses or the cost of the product or good is higher than the revenuethat amount is called loss.MMerchandise:The things purchased by a business organization for the purpose ofreselling them in same condition are called merchandise or goods.Reserve / provision:An amount to the estimated bad debts is set aside. When bad debts actuallyoccur they are meet out of this account. The is done by creating a provisionfor bad debts account.NNotes Payable:A note or bill from the view of its drawee is called Notes /bill payable.Notes Receivable:A note or bill from the view of its drawer is called notes /bill receivable.OOutstanding /Accrued / payable / unpaid Expenses:It means those expenses which incurred but have not been actually paidare called outstanding expenses.Phttp://www.commercepk.comSalman QureshiPage 8
Basic Accounting Terms 2016Proprietor:A person who invests the money or things in the business is called owner/proprietor. In fact he is that person who invests capital and gives its timeand attrition to business transaction. He is entitled to receive the profit andbear the loss of the business.Purchases:The cost of merchandise is called purchase. When the price of goodspurchased is paid in cash is called cash purchase and when it is paid onany future dates, is called credit purchase.Profit/Income:The amount which a business organization by deducting the cost of theproductfromtherevenue.In simple words the excess amount over the expenses or cost from therevenue is called profit.Prepaid / paid in advance / un-expired expenses :Means those incomes, which have been earned in current year but notreceived, are known as accrued income.Present Value: It means that the value of how much a future sum of moneyis worth today,QQuickassets:it is basic accounting Terms, Quick assets included Assets such as Cash,Temporary Investments, and Accounts Receivable which can easily convertinto cash.Quick ratio:http://www.commercepk.comSalman QureshiPage 9
Basic Accounting Terms 2016Quick ration also called acid test ratio. Quick ration compares the amountof current assets to the amount of current liabilities.RRevenue:The basic accounting term revenue means sorts of income received oraccrued are called as Revenue. This revenue may be earned from sale ofmerchandise or by rendering for the customer. It is also earned in shape ofcommission interest or discounts etc.ROI: It stands for Return on Investment, it means to measure the financialperformance of organization related to the money that was invested. it canbe calculated by dividing Net profit by the investment cost. ROI resultexpress in percentage.SSales:The amount earned from sales of goods is called sales. If this price isreceived in cash, it is called as cash sales and when it is to be received onany some future dates, is called credit sales.Stock/Inventory:Goods or merchandise on hand that is goods remaining unsold is calledstock Inventory or stock in Trade.TTransaction:Any dealing between two or ore persons for goods or services which effectthe financial position of business and also can be measured in term ofmoney is called business transaction. It is of two types i.e. cash transactionand credit transaction.http://www.commercepk.comSalman QureshiPage 10
Basic Accounting Terms 2016Trade Discount:Trade Discount is a basic accounting terms which means When concessionor allowance or rebate is given by seller to buyer on listed or scheduledprice of goods at the spot of sale is called trade discount and there is noaccounting of trade discount.Trade discount is usually allowed or granted in following circumstances.1.2.3.4.When selling to a fellow trade.When the buyer is an old customer.When sale are made in bulk.As a custom of trade.Turnover:Turnover is basic accounting terms which means the process of goods inwhich it will complete from raw material to finished goods. It is calledstock turnover or inventory turnover .Simply turnover mean the sale ofgoods after the completion from raw material to finished goods.UUnadjusted Trial balance:Unadjusted trial balance is prepared before the recording the adjustingentries. The purpose of creating un-adjusted trial balance is to verify thatthe total amount of Debit is equal to total amount of Credit in ledgeraccounts.VVoucher:Any written evidence of business transaction is called voucher. Thevoucher may be cash memo, bill, invoice etc.Whttp://www.commercepk.comSalman QureshiPage 11
Basic Accounting Terms 2016Wages:The compensation given to the labor on hourly basis.Withdrawals:It is also called drawing, the amount which is withdrawal in business bythe owner, it reduce the owner equity and not a business expense.Work-in-progress:YYield:In business and accounting terms yield is called Market interest rate,current return, and effective interest rate.Basic Accounting Terms list is very important to understand before startlearning accounting. These basic accounting term can be helpful forinterview and frequently asked in interviews.http://www.commercepk.comSalman QureshiPage 12
the terms to understand accounting well. Basic Accounting terminologies includes all those important terms Basic Accounting Terms: The general and common accounting terms which are most important and widely used while learning accounting are as follow, List of key Accounting Terms; A Accountant: The First
FINANCIAL ACCOUNTING : MEANING, NATURE AND ROLE OF ACCOUNTING STRUCTURE 1.0 Objective 1.1 Introduction 1.2 Origin and Growth of Accounting 1.3 Meaning of Accounting 1.4 Distinction between Book-Keeping and Accounting 1.5 Distinction between Accounting and Accountancy 1.6 Nature of Accounting 1.7 Objectives of Accounting 1.8 Users of Accounting Information 1.9 Branches of Accounting 1.10 Role .
Accounting Policies, Changes in Accounting Estimates and Errors Objective 1 The objective of this Standard is to prescribe the criteria for selecting and changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and
ACCT 2100 Principles of Accounting 3 Ph.D. Accounting Virginia Tech Yes ACCT 3131 Cost Accounting I 3 Yes Berrigan, Isabel M ACCT 3124 Governmental Accounting 3 M.S. Accounting - Auditing University of New Orleans No ACCT 2100 Principles of Accounting 3 M.S. Accounting University of New Orleans No ACCT 3
Level 3 Accounting OVERVIEW – Course Information page ii General Overview NCEA Level 3 Accounting covers partnership accounting, company accounting, company annual report interpretation, cost accounting, management accounting and decision making. The Accounting Scholarship Standard is one standard with a focus on repo
Accounting Education, (2) Accounting Education, (3) Advances in Accounting Education, (4) Global Perspectives on Accounting Education, (5) Issues in Accounting Education, and (6) The Accounting Educators’ Journal. As noted in Table 1, this article is the 12th in a series of accounting education literature reviews first published in 1986.
Accounting Principles Generally Accepted Accounting Principles (GAAP) are the standard framework of guidelines for financial accounting/preparation of financial statements which has strong tight with the common accounting practices along with the accounting standards. Accounting principles are same as accounting concepts which discussed earlier.
Department of Accounting became the School of Accounting, and in late 1980, our undergraduate accounting program and master of accounting program started being ranked in the top five in the nation. We also moved into the School of Accounting building. In 1990, the School of Accounting changed its name to the Leventhal School of Accounting.
as advanced engineering mathematics and applied numerical methods. The greatest beneÞt to the reader will probably be derived through study of the programs relat-' 2003 by CRC Press LLC. ing mainly to physics and engineering applications. Furthermore, we believe that several of the MATLAB functions are useful as general utilities. Typical examples include routines for spline interpolation .
