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Bookeeping terms
| Term | Definition |
|---|---|
| Account Reconciliation | Compare two sets of records at the end of a particular accounting period. Verify that account balances are correct, identify discrepancies, and make adjustments to the account as required in order to record the correct values in the books. |
| accountant | An accountant keeps track of business transactions and financial records to issue financial statements and determine how a business is doing on a financial level. |
| Accounts Payable | Money a business owes to others for goods or services. |
| Accounts Payable Reconciliation | compare vendor statements or invoices with our accounts payable records. Make sure everything matches up - the amount charged for the goods or services we received should be the same as what’s in the books. |
| Accounts Receivable | Money that is owed to a business for providing a good or service. |
| Accounts Receivable Aging Report | Accounts Receivable Aging is like a report card for a business. It shows how long outstanding invoices are, which helps us understand how well we’re doing financially and how reliable our customers are. |
| Accounts Receivable Doubtful | An allowance for doubtful accounts, also known as a Bad Debt Reserve, is a contra asset that reduces the value of an asset like Accounts Receivable. It’s a company’s estimate of the amount of money they won’t receive from customers who don’t pay. |
| Accounts Receivable Reconciliation | Compare outstanding customer invoices and balances with accounts receivable in the general ledger. Double-check amounts, look for errors or irregularities, and detect suspicious activity. |
| Accounts Uncollectible | Accounts Uncollectible are receivables, loans, or other debt that will not be paid by a debtor. |
| accrual | An entry to record a future revenue or expense in the current period, even if money hasn't been paid or received yet. |
| Accrual Accounting | Revenues and expenses are reported or recognized on financial reports when they are earned or incurred, rather than when the payment is made or received. |
| Accumulated Depreciation | Accumulated Depreciation is the total amount of Depreciation Expense that has been allocated for an asset since the asset was put into use. |
| Adjusted Trial Balance | Listing of the ending balances in all accounts after adjusting entries have been prepared. |
| Adjusting Entries | Creating new entries to record depreciation and accrual adjustments; these are provided to bookkeepers by a CPA or an accountant. |
| Amortization | The structure process of paying both the principal and interest over a period of time. |
| Assets | Anything the business owns of value or a resource of value that has the potential to be transformed into cash. |
| Average Cost Method (AVCO) | Inventory value is based on the average cost of all materials purchased during the reporting period. |
| Bad Debt | Bad Debt is the term used for any loans or outstanding balances that a business deems uncollectible. For businesses that provide loans and credit to customers, bad debt is normal and expected. |
| Bad Debt Expenses | Companies recognize bad debt expenses when customers can’t pay due to financial difficulties. These debts are recorded as allowances for doubtful accounts on the balance sheet. |
| Balance Sheet | The Balance Sheet is a tinancial statement that reports a business's assets, liabilities, and equity at a specitic point in time. |
| balances (account balances) | A total amount in an account at any given time. |
| Bank Deposit Receipt (slip) | A bank form used to document the money the customer intends to deposit into their bank account. |
| Bank Reconciliation | Compare the books to the statement issued by the bank. Compare every transaction in the bank statement to the business's internal records (including bank deposit slips and canceled checks) to verify both records are matching. |
| bill | Record to show what business owes vendor for goods/ services. |
| book balance | The ledger balance as of a certain date. |
| Cash Sales | Cash Sales refers to transactions where the customer pays for the goods or services immediately with cash, check, or a credit or debit card. |
| Cash Basis Accounting | Revenues and expenses are reported or recognized on financial reports when the payment is received or made, rather than when work is performed. |
| Chart of Accounts | Lists all the accounts and sub-accounts used to categorize transactions. |
| check | A monetary instrument directing the financial institution to pay the bearer a specified sum of money. |
| close the books | Completing all necessary accounting tasks and procedures at the end of a financial period including finalizing financial statements, reconciling accounts, making adjusting entries, and preparing the accounts for the next accounting period. |
| Commercial Loans | A debt-based funding arrangement between a business and a financial institution (traditional model of loan). |
| Common Stock | Refers to the capital the business received in exchange for issuing stock to stockholders. |
| Compensating Error | Two or more errors cancel each other out, for example fixed assets account is incorrectly understated $600 and rent account is incorrectly overstated $600. |
| Complete Reversal of Entries | The correct amount is posted to the correct accounts, but the debits and credits are reversed, for example debiting an account that should have been credited. |
| Confidentiality | Clients entrust bookkeepers with very sensitive financial information, and a business owner must be able to trust that their bookkeeper will treat their data with the utmost care. |
| Conflict of Interest | When a person's individual interests raise a question about their ability to act or make decisions or judgments objectively. |
| Contra Asset | A contra asset account offsets the balance of the associated value on the balance sheet; the natural balance of the account will either be a zero or a credit (negative) balance. It is set up as a sub-account in the chart of accounts. |
| Cost of Goods Sold (COGS) | Cost of Goods Sold, or Cost of Sales, is the total cost of producing or buying a business’s products, including materials, labor, overhead, shipping, and freight. |
| Bookkeeper | Bookkeepers document transactions, manage accounts, and record financial data |
| Budget | A forecast of revenue and expenses for a future period of time. |
| C Corp | A business structure that is owned by one or more shareholders, but they do not carry any personal liability |
| Capital | The financial Money's the business uses for operations and growth, such as cash debt or equity |
| Capital Contribution | The money or assets given to the business by the owner or partners |
| Cash | Assets that exist in cash form or can be immediately converted into cash |
| cash payments | Cash receipts are the collection of money typically for a customer which increases (debits) the cash balance recognized on a businesses balance sheet |
| Credit Card Reconciliation | Compare credit card receipts to statements from our financial institution. Double-check the statement amount matches actual payments. Report any discrepancies to the credit card company for resolution. |
| Credit Memo | A document issued by a seller that reduces the amount a customer owes from a previous sales invoice. |
| Credit Sales | Transactions where the customer pays for the goods or services on terms. |
| credits | A decrease in assets or expenses or an increase in liabilities, owner's equity, or revenue. |
| Current Assets | Assets that can be converted into cash quickly (within a year). |
| Current Liabilities | Debt obligations that come due within one year. |
| Data Entry Error | The amount was written incorrectly or under the incorrect account. |
Created by:
noodlee