Common Accounting Terms And Definitions
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 bookkeeping business is no exception.
To help you understand the terms, acronyms, and phrases regularly used when working with a bookkeeper, Your Ledger Pro has created this handy reference guide. Here you’ll find valuable information allowing you to comprehend and communicate your bookkeeping needs effectively.
Accounting: The process of organizing financial data in a bookkeeping system.
Accountant/Bookkeeper: These terms are interchangeable. The person who sorts and enters the financial data into the bookkeeping system.
Accounts Payable (A/P): A/P relates to any unpaid vendor invoices and bills. The A/P account is a liability on the balance sheet. When a bill gets paid, it gets removed from this group.
Accounts Receivable (A/R): A/R is any unpaid customer invoice which means any money owed to the business by customers. It gets listed on the balance sheet as an asset. When a customer pays an invoice, it gets removed from this group.
Assets: Assets get listed on the balance sheet. They are items of value owned by the business. It may include current assets like cash in bank accounts and Accounts Receivable. It may also consist of non-current assets such as buildings, land, and vehicles.
Balance Sheet: The balance sheet report shows how much equity is in the business, how many assets the company owns, and any liabilities the company owes to any creditors.
Income Statement/Profit & Loss Report: This report shows the total revenue the business has earned and the total expenses the company has paid for a specific period. The difference between the two is either a profit or a loss.
Reconcile: The process compares two sets of records to ensure that the figures are accurate, consistent, and complete.
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If you’re looking for a bookkeeper, reach out to the experts at Your Ledger Pro. With many years of accounting experience, we are responsive and render tailored solutions. We specialize in bookkeeping, payroll, tax preparation, and Quickbooks Online.
We serve clients across College Place, Walla Walla, Benton City, Richland, Kennewick, Connell, Dayton, Washington, Hermiston, Pendleton, Oregon, and the surrounding area.