23 Bookkeeping Terms
Unless you have a background in accounting, the majority of bookkeeping terms seem like jargon and can be confusing.
From “general ledger” to “chart of accounts,” these terms require small-business owners to spend time researching just to reconcile their books. It’s added pressure on top of an already complicated and overwhelming process.
1. Accounts: Your financial transaction records are grouped by type (like revenue and expenses).
2. Accounting Period: The time frame for recording and reporting financial transactions, often a year.
3. Accounts Payable: Unpaid bills owed to vendors or suppliers, listed as liabilities.
4. Accounts Receivable: Money owed to you by customers, typically unpaid invoices.
5. Accruals: Unpaid expenses or uncollected revenue, recorded at the time of the transaction.
6. Assets: What your business owns, tangible or intangible, listed on your balance sheet.
7. Balance Sheet: A snapshot of your assets, liabilities, and equities, revealing your financial health.
8. Bank Reconciliation: A report ensuring your bank account matches your bank statement.
9. Cash Flow: Money coming in and out of your business, is crucial for financial health.
10. Chart of Accounts: How you categorize transactions for proper reporting.
11. Cost of Goods Sold (COGS): Expenses for creating products or services, affecting profitability.
12. Double-entry Bookkeeping: Recording every transaction twice, maintaining financial accuracy.
13. Equities: Your business worth after paying off liabilities, found on the balance sheet.
14. Expenses: Money spent on running your business, is vital for tax deductions.
15. Expense Category: Organizing expenses by type for better tracking and reporting.
16. General Ledger: A summary of all accounts, essential for financial management.
17. Income Statement: A report on revenue and expenses, revealing profitability.
18. Journals: Records of daily business transactions before they go into the general ledger.
19. Liabilities: What your business owes, such as unpaid invoices and loans.
20. Payroll: Managing employee compensation, taxes, and contributions.
21. Single-entry Bookkeeping: Recording each transaction once, is simpler but prone to errors.
22. Trial Balance: A check to ensure debit and credit accounts match before creating financial statements.
23. Worksheet: A spreadsheet for adjustments when the trial balance doesn't match.
Understanding these terms is key to managing your business finances effectively. 💰📊 #FinancialLiteracy #BusinessSuccess