No matter what career you are pursuing, you
will need to learn the lingo used in your
field or industry. All industries have their own unique blend of terms,
acronyms and abbreviations.
"Accounting is the language of business.
Knowing the language is critical for success in any corporate function because
the information is communicated using these terms,” Because of the strange
accounting job titles, different accounting
myths and these industry terms, it’s not uncommon for people to
think working in accounting is complicated or confusing when really it’s just
got its own unique language.
As someone new to the accounting industry, you
will be introduced to a variety of new terms. Beware: they may seem
intimidating at first. But familiarizing yourself with these basic
accounting terms, acronyms and abbreviations early on will help you better
prepare for a successful accounting
career. Knowing how to talk the talk will allow you
to quickly shift your focus in the classroom beyond these terms and toward
learning the accounting techniques you will use in your job.
Basic Accounting Terms List
1. Accounts Receivable – AR
Definition: The amount of money owed by your
customers after goods or services have been delivered and/or used.
2. Accounting – ACCG
Definition: A systematic way of recording
and reporting financial transactions.
3. Accounts Payable – AP
Definition: The amount of money you owe
creditors (suppliers, etc.) in return for good and/or services they have
delivered.
4. Assets (Fixed and Current) – FA and CA
Definition: Current assets are those that
will be used within one year. Typically this could be cash, inventory or
accounts receivable. Fixed assets (non current) are more long-term and will
likely provide benefits to a company for more than one year, such as a building,
land or machinery.
5. Balance Sheet – BS
Definition: A financial report that summarizes
a company's assets (what it owns), liabilities (what it owes) and owner’s
equity at a given time.
6. Capital – CAP
Definition: A financial asset and its value,
such as cash or goods. Working
capital is calculated by taking your current assets subtracted
from current liabilities.
7. Cash Flow – CF
Definition: The revenue or expense
expected to be generated through business activities (sales, manufacturing,
etc.) over a period of time. Having a positive cash flow is
essential in order for businesses to survive in the long run.
8. Certified Public Accountant – CPA
Definition: A designation given to
someone who has passed a standardized CPA exam and
met government-mandated work experience and educational requirements to become a CPA.
9. Cost of Goods Sold – COGS
Definition: The direct expense related
to producing the goods sold by a company. This may include the cost of the raw
materials (parts) and amount of employee labor used in production.
10. Credit – CR
Definition: An accounting entry that may
either decrease assets or increase liabilities and equity
on the company's balance sheet, depending on the transaction. When using the double-entry
accounting methodthere will be two recorded entries for every
transaction: a credit and a debit.
11. Debit – DR
Definition: An accounting entry where
there is either an increase in assets or a decrease in
liabilities on a company's balance sheet.
12. Expenses (Fixed, Variable,
Accrued, Operation) – FE, VE, AE, OE
Definition: The fixed, variable,
accrued or day-to-day costs that a business may incur through its
operations. Examples of expenses include payments to banks, suppliers,
employees or equipment.
13. Generally Accepted Accounting
Principles – GAAP
Definition: A set of rules and
guidelines developed by the accounting industry for companies
to follow when reporting financial data.
Following these rules is especially critical for all publicly traded companies.
14. General Ledger – GL
Definition: A complete record of the financial transactions
over the life of a company.
15. Liabilities (Current and
Long-Term) – CL and LTL
Definition: A company's debts or
financial obligations it incurred during business operations. Current
liabilities are those debts that are payable within a year, such as a debt to
suppliers. Long-term liabilities are typically payable over a period of time
greater than one year. An example of a long-term liability would be a bank
loan.
16. Net Income – NI
Definition: A company's total earnings,
also called net profit or the “bottom line.” Net income is calculated
by subtracting totally expenses from total revenues.
17. Owner's Equity – OE
Definition: An owner’s equity is typically
explained in terms of the percentage amount of stock a person has ownership
interest in the company. The owners of the stock are commonly referred to
as the shareholders.
18. Present Value – PV
Definition: The value of how much
a future sum of money is worth today. Present value helps us understand how
receiving $100 now is worth more than receiving $100 a year from now.
19. Profit and Loss Statement – P&L
Definition: A financial statement
that is used to summarize a company’s performance and financial position by
reviewing revenues, costs and expenses during a specific period of
time; such a quarterly or annually.
20. Return on Investment – ROI
Definition: A measure used to evaluate the
financial performance relative to the amount of money that was invested.
The ROI is calculated by dividing the net profit by the cost of the
investment. The result is often expressed as a percentage.
Tks very much for your post.
ReplyDeleteAvoid surprises — interviews need preparation. Some questions come up time and time again — usually about you, your experience and the job itself. We've gathered together the most common questions so you can get your preparation off to a flying start.
You also find all interview questions at link at the end of this post.
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