Accounts Payable (AP) - The amount of money a company owes to its creditors for goods and services purchased on credit.
Accounts Receivable (AR) - The amount of money owed to a company by its customers for goods or services delivered but not yet paid for. Accrued Expense - An expense that has been incurred but not yet paid. Amortization - The process of gradually writing off the initial cost of an intangible asset over a period. Asset (A) - Any resource owned by a business that is expected to provide future economic benefits. Balance Sheet (BS) - A financial statement that summarizes a company’s assets, liabilities, and shareholders’ equity at a specific point in time. Book Value (BV) - The value of an asset as it appears on the balance sheet, calculated as the cost of the asset minus accumulated depreciation. Capital Expenditure (CAPEX) - Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. Cash Flow (CF) - The net amount of cash being transferred into and out of a business. Cost of Goods Sold (COGS) - The direct costs attributable to the production of the goods sold by a company. Credit (CR) - An accounting entry that either decreases assets or increases liabilities and equity on the company’s balance sheet. Debit (DR) - An accounting entry that either increases assets or decreases liabilities and equity on the company’s balance sheet. Deferred Revenue - Money received by a company for goods or services not yet delivered or performed. Depreciation - The systematic allocation of the cost of a tangible asset over its useful life. Dividend - A portion of a company’s earnings distributed to shareholders. Equity (E) - The value of the owner’s interest in the company, calculated as total assets minus total liabilities. Expense (EX) - The economic costs that a business incurs through its operations to earn revenue. Fiscal Year (FY) - A one-year period that companies and governments use for financial reporting and budgeting. Fixed Asset - Long-term tangible property that a firm owns and uses in its operations to generate income. General Ledger (GL) - A complete record of all financial transactions over the life of a company. Goodwill - An intangible asset that arises when a buyer acquires an existing business, representing the value of the business’s brand name, customer base, and other factors. Gross Profit (GP) - The difference between revenue and the cost of producing goods or services sold. Income Statement (IS) - A financial statement that shows a company’s revenues and expenses over a specific period, resulting in net profit or loss. Interest Expense - The cost incurred by an entity for borrowed funds. Inventory - The goods and materials a business holds for the purpose of resale. Journal Entry (JE) - A record of a financial transaction in the accounting system. Liability (L) - A company’s legal financial debts or obligations that arise during the course of business operations. Liquidity - The ability of a company to meet its short-term obligations using its most liquid assets. Marketable Securities - Liquid financial instruments that can be quickly converted into cash at a reasonable price. Net Income (NI) - The total profit of a company after all expenses and taxes have been deducted from total revenue. Operating Expense (OPEX) - The expenses incurred during regular business operations. Overhead - The ongoing administrative expenses of a business that are not directly attributed to any specific business activity but are necessary for the business to function. Payroll - The total amount of wages paid by a company to its employees. Prepaid Expense - An expense that has been paid in advance and is recorded as an asset until it is used or consumed. Profit and Loss Statement (P&L) - Another term for the income statement, showing revenues, expenses, and profits over a period. Reconciliation - The process of ensuring that two sets of records (usually the balances of two accounts) are in agreement. Retained Earnings (RE) - The cumulative amount of net income that a company has retained, rather than distributed to shareholders as dividends. Revenue (REV) - The income generated from normal business operations and includes discounts and deductions for returned merchandise. Trial Balance (TB) - A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal. Working Capital (WC) - The difference between a company’s current assets and current liabilities, indicating the liquidity of the business.
