20 Key English Accounting Termsdi Tom Roper
When looking globally at such a huge and fundamental part of business and society we often see that accounting can appear to have its own language. With such a wide range and complex terminology; so many phrases, acronyms and different organisations to be aware of, we can sometimes be unaware of even the most simple and fundamental terms in English. So, let’s take a look at the top accounting terms that are more commonly used across the English speaking Accounting community. This week let’s start with the first 20 and keep following our articles for other entries onto this list:
- Credit: An accounting entry of recording a transaction where there is either an increase in liabilities, equity, and revenue or a decrease in assets and expenses.
- Debit: An accounting entry where a transaction is recorded when there is either an increase in assets and expenses or a decrease in liabilities, equity, and revenue.
- Double entry accounting method: The method of maintaining a record of transactions where each transaction is entered into one or more accounts. These account debits must equal the account credits.
- GAAP: Is the acronym for the Generally Accepted Accounting Principles (which we will look at further in articles this year). The GAAP represents a set of rules, conventions, and procedures set by the Financial Accounting Standards Board (FASB) to define accepted accounting practice in the United States.
- Cash basis accounting: An accounting method where revenues and expenditures are recorded when they are received and paid.
- Double entry accounting method: A method of recording transactions in which each transaction is entered into one or more accounts. The account debits must equal the account credits.
- Accrual basis accounting: Accounting method that reports income when earned and expenses when incurred, rather than only in the periods in which cash is received or paid by the company.
- Net worth: Equal to the excess of assets over liabilities.
- Book value: The amount that an asset or liability shows on the balance sheet of a company.
- Market value: The amount the investors are willing to pay for a share of stock on the open market.
- Salvage value: Selling price assigned to retired fixed assets or merchandise that are unsellable through regular channels
- Preferred stock: A type of capital stock that carries certain preferences over common stock, for example: a priority claim on dividends and assets.
- Asset: What a company owns, such as any owned tangible or intangible item that has an economic value useful to the owner.
- Common stock: The value assigned to a company’s issued shares. This type of capital stock has no preferences, such as in terms of dividends or voting rights.
- Bank reconciliation: A comparison of the balance shown on the bank statement and the balance of the cash account in the company’s general ledger. Differences are identified and researched.
- Bad debt: Portion of an account, loan, or note considered to be uncollectible.
- Write off: Charging an asset account to expense or loss.
- Contingent liability: Potential liability arising from a past transaction or a subsequent event.
- Appreciation: Increase in the value of an asset such as stocks, bonds, or real estate.
- Depreciation: The consequential allowance for expense made for wear and tear on an asset over its estimated useful life.
- Amortisation: The allocation of an intangible asset’s cost over a period of time.
These are just a few of the key terms and vocabulary for Accounting in English, we will further explore these in future articles and other lists, don’t forget if you need any further help with these terms and their context, get in touch either with comments here or with our Business English courses for Accounting at firstname.lastname@example.org