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Know All About Basic Accounting Terms

In every business organization, there is an accounting section that plays a great role to track the financial reports and other finance-related activities. Today we will get to know different accounting terms that will help you get to know the meaning of such accounting words with our Accounting Services.

Accounting Terms


Audit Services or Audit Firm first explains a term of Assets are something to involve as a fiscal value which is retained by many businesses. However, the usual tangible business assets are cash, vehicles, accounts, land, buildings, equipment, cash, vehicles, accounts receivable, and many more. Even the intangible assets comprise like lists, franchise contracts, promising finance or lease contracts, brand names, copyrights, patents, and lots more.


Accruals belong to revenues that are received but not even mentioned into the books (such as complete but not invoiced sales) or expenditures that are entering but not incurred and they are goods which are bought but not so far billed for.

Accounts Receivable

Accounts receivable are some amounts of cash amounts which are generally payable to the business by customers/clients for various goods and services offered. As the clients have a legal debt to recompense, the monies which are mentioned an asset on the balance sheet.

Bad Debt Expense

Bad debts are acquired when customers don’t go to pay amounts which are payable. They are exactly tracked as per an expense on financial reports.


Working capital is the amount of money that a company has offered to pay bills or invest. It is the same as the value of all existing assets demerit liabilities which is well-thought-out a major amount of the health of a business.


Next comes to the dividends which are supplies of a share of company incomes to holders (shareholders) of the business. Dividends are mainly distributed frequently or even regularly and might comprise cash or extra shares in the business. When it comes to tax purposes, a business proprietor can choose dividends to remuneration.


Depreciation mainly happens in business assets they include vehicles and equipment deterioration in value from time to time and this occurs due to use or uselessness. Depreciation is an imperative tax assumption with a proportion of the real value of the asset which is mentioned on a yearly basis on the rate of decline.


Expenses are charges which are acquired by a business to make money. However, the expenses are fixed like rents, salaries, etc. or that generally alters depending on sales or manufacture phases.


Equity involves that value of money invested in the company and done by the proprietors (stockholders) demerit any money withdrawn in the form of draws even not on a salary basis.

Fiscal Year

A fiscal year involves 12 month period that exactly begins and end of the yearly financial records for a business. Though, it is not even essentially a response to the calendar year.


Next accounting term is Liabilities and this accounting term belongs to the financial responsibilities which are payable by the company, such as income taxes, rents, salaries, utilities, interest payments, amounts payable to contractors, and more. Liabilities come with both short and long term and as these are assembled on balance sheets when it comes to organization.


Another accounting term is about revenue so, it is very easy to understand and revenue means the gross income and the gross earnings is calculated with all cash which is made through the procedure sale of numbers of good and services, royalties, property, shares in the company, interest, and more and even this is done before deducting expenditures.

Also Read: The Difference Between Bookkeeping & Accounting

Financial Statements   

Balance Sheet

A balance sheet is a picture of a corporation’s fiscal status within time. It is generally prepared into two major supports, given with assets in one support and liabilities and stockholders’ equity in the other place.

Income Statement

The Income Statement mainly depicts your revenues, expenses, and profit for a specific period of time. It’s a picture of your business that mainly depicts to your business is either gainful or not exactly.

Cash Flow Statement

The Cash Flow Statement depicts the activities of cash and cash counterparts in and out of the business. Many businesses are failed due to long-lasting cash flow glitches.

General Ledger   

The general ledger is the widespread tracking process of a company’s fiscal transactions over the complete organization, such as assets, liabilities, proceeds, expenditures, and equity processes.

These are all accounting that you should know properly.

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


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