Hi everyone it is a glossary of terms that each accountant has to know.

1.Accounting :

The systematic and comprehensive recording of financial transactions pertaining to a business. Accounting also refers to the process of summarizing, analyzing and reporting these transactions. The financial statements that summarize a large company's operations, financial position and cash flows over a particular period are a concise summary of hundreds of thousands of financial transactions it may have entered into over this period. Accounting is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by sizable finance departments with dozens of employees at larger companies.

2.Credit :

An accounting entry that either decreases assets or increases liabilities and equity on the company's balance sheet. On the company's income statement, a debit will reduce net income, while a credit will increase net income.

3.Debit:

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet or in your bank account. A debit on an accounting entry will have opposite effects on the balance depending on whether it is done to assets or liabilities, with a debit to assets indicating an increase and vice versa for liabilities.

4.Accounts:

Financial records of an organization that register all financial transactions, and must be kept at its principal office or place of business. The purpose of these records is to enable anyone to appraise the organization's current financial position with reasonable accuracy. Firms present their annual accounts in two main parts: the balance sheet, and the income statement (profit and loss account). The annual accounts of a registered or incorporated firm are required by law to disclose a certain amount of information. And have to be certified by an external auditor that they present a 'true and fair view' of the firm's financial affairs.

5.Balance sheet:

A condensed statement that shows the financial position of an entity on a specified date (usually the last day of an accounting period).

6.Tax:

An involuntary fee levied on corporations or individuals that is enforced by a level of government in order to finance government activities.

7.Withdrawals:

Removing funds from an account, plan, pension or trust. In some cases, conditions must be met in order to withdraw funds without penalization. There are two ways to withdraw money: in cash or in kind.

8.Deposits:

A term deposit is a deposit held at a financial institution that has a fixed term. These are generally short-term with maturities ranging anywhere from a month to a few years. When a term deposit is purchased, the lender (the customer) understands that the money can only be withdrawn after the term has ended or by giving a predetermined number of days notice. These types of financial products are sold by banks, thrift institutions and credit unions.

9.Accounting Cycle :

The name given to the collective process of recording and processing the accounting events of a company. The series of steps begin when a transaction occurs and end with its inclusion in the financial statements. The nine steps of the accounting cycle are:

1.      Collecting and analyzing data from transactions and events.

2.      Putting transactions into the general journal.

3.      Posting entries to the general ledger.

4.      Preparing an unadjusted trial balance.

5.      Adjusting entries appropriately.

6.      Preparing an adjusted trial balance.

7.      Organizing the accounts into the financial statements.

8.      Closing the books.

9.      Preparing a post-closing trial balance to check the accounts.

Also known as "bookkeeping cycle".

10.               Accrued Revenue :

An asset class for goods or services that have been sold or completed but that have not yet been billed and/or paid for. Accrued revenue is income that has been incurred but not received, such as monthly rent that is due in arrears, or following the monthly rental period. The income has been earned (since an individual or firm rented the item) but the revenue has not been received (as per the rental agreement to pay in arrears).

11.               Trial balance:

A trial balance is a worksheet listing the debit or credit balances of all the ledger accounts for an entity.  Under accounting theory, the total of all the debits must equal the total of all the credits.  Since the trial balance is a list of all the accounts, it serves as an accuracy check.  Preparing a trial balance is the first step for closing the books at the end of an accounting period.

12.               Revenue :

The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income.

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