A running reference for the terms you'll see throughout Accomium and in conversations with your accountant - no jargon left unexplained.
Money your business owes to vendors and suppliers for goods or services received but not yet paid for. It appears as a liability on the balance sheet until settled.
Money owed to your business by customers for goods or services already delivered. It appears as an asset on the balance sheet until the customer pays.
A method of recording revenue and expenses when they are earned or incurred, rather than when cash actually changes hands. It gives a more accurate picture of a period's financial performance than tracking cash alone.
Anything a business owns that has economic value, such as cash, inventory, equipment or amounts owed by customers. Assets are listed on the balance sheet and are typically split into current and fixed (long-term) assets.
A financial statement showing what a business owns (assets), what it owes (liabilities) and the owners' remaining stake (equity) at a single point in time.
The full list of accounts a business uses to categorize every transaction - assets, liabilities, equity, income and expenses - organized so financial statements can be built directly from it.
A document issued to a customer that reduces the amount they owe, typically for a returned item, an overcharge, or a service that was not delivered as invoiced.
The direct cost of producing or acquiring the goods a business sold during a period, including materials and direct labor. Subtracting COGS from revenue gives gross margin.
The two sides of every double-entry bookkeeping transaction. A debit increases assets and expenses and decreases liabilities, equity and income; a credit does the reverse. Every transaction's debits and credits must always balance.
The systematic allocation of a fixed asset's cost over its useful life, reflecting that the asset loses value as it is used. It reduces the asset's book value and is recorded as an expense each period.
The owners' remaining stake in a business after subtracting liabilities from assets. It represents what would be left over for the owners if all liabilities were paid off using the business's assets.
A twelve-month period a business uses for accounting and reporting purposes. It does not have to match the calendar year - many businesses choose a fiscal year that aligns with their natural business cycle.
The complete record of every financial transaction a business has recorded, organized by account. It is the single source every financial statement and report is ultimately built from.
Revenue minus the cost of goods sold, usually expressed as a percentage of revenue. It measures how much a business keeps from sales before accounting for operating expenses.
Also called a profit and loss statement (P&L), it shows revenue, expenses and net income over a period of time, rather than at a single point like a balance sheet.
A manual record of a transaction in the general ledger, made up of at least one debit and one credit that balance each other. Used for adjustments and transactions that don't come from a standard invoice, bill or payment.
An amount a business owes to someone else, such as a loan, a vendor bill or unpaid tax. Liabilities are listed on the balance sheet and are typically split into current and long-term liabilities.
Total revenue minus total expenses for a period - often called the "bottom line" because it is the final figure on an income statement.
The agreed conditions under which a customer must pay an invoice, such as "net 30" (payment due 30 days after the invoice date). Payment terms affect cash flow planning and are usually set per customer.
The process of comparing two sets of records - most commonly a bank statement against the ledger - to confirm they match, and identifying and resolving any differences between them.
A report listing every account and its balance at a point in time, used to confirm that total debits equal total credits before financial statements are prepared.
Current assets minus current liabilities - a measure of a business's short-term liquidity and its ability to cover obligations due within the next year.
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