A Glossary Of Accounting Terminology
Every industry has its own language and terms. These words and phrases can be confusing to anyone who is not part of the daily operations of a specific industry, and the accounting business is no exception.
To help you understand the terms, acronyms, and phrases regularly used when working with an accountant, Balance & Foster Inc. has created this handy reference guide. Here you’ll find valuable information allowing you to comprehend and communicate your accounting needs effectively.
Method of ACCOUNTING that recognizes REVENUE when earned rather than when collected. Expenses are recognized when incurred rather than when paid.
It’s a series of payments, usually payable at specified time intervals.
All or portion of an ACCOUNT, loan, or note receivable that’s considered uncollectible.
The line in a FINANCIAL STATEMENT that shows NET INCOME or LOSS.
Outlay of money used to acquire or improve capital assets such as buildings and machinery.
Expenditure identified with goods or services acquired and measured by the amount of cash paid or the market value of other property, CAPITAL STOCK, or services surrendered. Expenditures that get written off during two or more accounting periods.
Method of bookkeeping by which REVENUES and EXPENDITURES are recorded when received and paid.
It’s a form of doing business according to a charter granted by a province or federal government. Corporations typically are characterized by the issuance of freely transferable CAPITAL STOCK, perpetual life, centralized MANAGEMENT, and limitation of owners’ LIABILITY to the amount they INVEST in the business.
ASSET that one can reasonably expect to convert into cash, sell, or consume in operations within a single operating cycle or within a year if more than one cycle is completed each year.
An obligation whose LIQUIDATION is expected to require the use of existing resources classified as CURRENT ASSETS or the creation of other current liabilities.
It’s used to indicate a COMPANY’s liquidity and ability to pay short-term debts. It is calculated by dividing CURRENT ASSETS by CURRENT LIABILITIES.
Entry on the right side of a DOUBLE-ENTRY BOOKKEEPING system that represents the reduction of an ASSET or expense or the addition to a LIABILITY or REVENUE.
Entry on the left side of a DOUBLE-ENTRY BOOKKEEPING system that represents the addition of an ASSET or expense or the reduction to a LIABILITY or REVENUE.
BALANCE remaining after one or a series of bookkeeping entries. This amount represents an ASSET or an expense of the entity.
An accelerated method of depreciating a tangible long-lived ASSET by applying a fixed rate based on some multiple of the STRAIGHT-LINE DEPRECIATION rate to its CARRYING VALUE.
We hope these terms made you feel confident about working with a tax accountant.
If you’re looking for a tax accountant in Hamilton, ON, reach out to the experts at Balance & Foster Inc. With many years of experience in the accounting field, we bring global capabilities with a local touch that creates world-class assurance. We specialize in tax, accounting, and bookkeeping. We also take care of trusts and estates for clients. We serve clients across Hamilton, St. Catharines, Niagara Falls, Toronto, Markham, Vaughan, Kitchener, London, and the surrounding areas.