1.

Accounting - process of identifying, measuring, and reporting financial

information of an entity
2. Accounting Equation - assets = liabilities + equity
3. Accounts Payable - money owed to creditors, vendors, etc.
4. Accounts Receivable - money owed to a business, i.e.: credit sales
5. Accrual Accounting - a method in which income is recorded when it is earned
and expenses are recorded when they are incurred
6. Asset - property with a cash value that is owned by a business or individual
7. Balance Sheet - summary of a company's financial status, including assets,
liabilities, and equity
8. Bookkeeping - recording financial information
9. Cash-Basis Accounting - a method in which income and expenses are recorded
when they are paid.
10. Chart of Accounts - a listing of a company's accounts and their corresponding
numbers
11. Cost Accounting - a type of accounting that focuses on recording, defining, and
reporting costs associated with specific operating functions
12. Credit - an account entry with a negative value for assets, and positive value for
liabilities and equity.
13. Debit - an account entry with a positive value for assets, and negative value for
liabilities and equity.
14. Depreciation - recognizing the decrease in the value of an asset due to age and
use
15. Double-Entry Bookkeeping - system of accounting in which every transaction
has a corresponding positive and negative entry (debits and credits)
16. Equity - money owed to the owner or owners of a company, also known as
"owner's equity"
17. Financial Accounting - accounting focused on reporting an entity's activities to
an external party; ie: shareholders
18. Financial Statement - a record containing the balance sheet and the income
statement
19. Fixed Asset - long-term tangible property; building, land, computers, etc.
20. General Ledger - a record of all financial transactions within an entity
21. Income Statement - a summary of income and expenses
22. Job Costing - system of tracking costs associated with a job or project (labor,
equipment, etc) and comparing with forecasted costs
23. Journal - a record where transactions are recorded, also known as an "account"
24. Liability - money owed to creditors, vendors, etc
25. Liquid Asset - cash or other property that can be easily converted to cash
26. Loan - money borrowed from a lender and usually repaid with interest
27. Net Income - money remaining after all expenses and taxes have been paid
28. Non-operating Income - income generated from non-recurring transactions; ie:
sale of an old building
29. Note - a written agreement to repay borrowed money; sometimes used in place of
"loan"
30. Operating Income - income generated from regular business operations
 31. Payroll - a list of employees and their wages
32. Profit - see "net income"
33. Profit/Loss Statement - see "income statement"
34. Revenue - total income before expenses.
35. Single-Entry Bookkeeping - system of accounting in which transactions are
entered into one account
36. amortization
The systematic allocation of the discount, premium, or issue costs of a bond to expense over
the life of the bond.
The systematic allocation of an intangible asset to expense over a certain period of time.
The systematic reduction of a loan's principal balance through equal payment amounts which
cover interest and principal repayment.
37. intangible assets
Some examples of intangible assets include copyrights, patents, goodwill, trade names,
trademarks, mail lists, etc. These assets will be reported at cost (or lower) on the balance
sheet after property, plant and equipment. Trade names and trademarks that were developed
by a company (as opposed to buying them from another company at a significant cost) may
not appear on the balance sheet, even though they might be a company's most valuable
asset.
38. capital budgeting
The formal planning for significant expenditures, such as property, plant and
equipment.
39. cash
A current asset account which includes currency, coins, checking accounts, and
undeposited checks received from customers. The amounts must be unrestricted. (Restricted
cash should be recorded in a different account.)
40. carrying amount
Also referred to as book value or carrying value; the cost of a plant asset minus the
accumulated depreciation since the asset was acquired. This net amount is not an indication
of the asset's fair market value. Also used in reference to bonds payable: the face amount in
Bonds Payable plus Premium on Bonds Payable or minus Discount on Bonds Payable and
minus the unamortized issue costs.
41. average inventory
The average amount of inventory during a period of time. Since the amount reported in
the Inventory account is the ending balance on one specific day, it is necessary to compute
an average balance when relating this account to the cost of goods sold (which covers a
period of time).
42. paid-in capital
The amount paid or contributed by stockholders in exchange for shares of a
corporation's stock.

43. price earnings ratio

 The ratio of the market value of a share of common stock to the earnings per share
of common stock. For example, if a corporation earned $3 per share and its stock is trading at
$36, it's price earnings ratio is 12.
44. line of credit
The amount that a bank commits to lend a borrower during a specified purpose.
45. prepaid expense
A current asset representing amounts paid in advance for future expenses. As the
expenses are used or expire, expense is increased and prepaid expense is decreased.
46. present value model
A term used to describe the net present value method and the internal rate of
return. The model discounts future cash flows back to the present time.
47. present value of an annuity
The discounted value of a series of equal amounts occurring at future points with
equal time intervals.
48. days' sales in accounts receivable
This indicates (on average) how many days of credit sales have not yet been
collected. If the credit terms are net 30 days, you would expect this to be at least 30 days.
49. days' sales in inventory
This indicates (on average) how many days it takes to sell the merchandise held
in inventory.
50. present value
Future amounts that have been discounted to the present.
51. historical cost
The original cost incurred to acquire an asset (as opposed to replacement cost,
current cost, or cost adjusted by a general price index). If a company purchased land in 1940
for $1,000 and continues to hold that land, the company's balance sheet in the year 2009 will
report the land at $1,000 (even if the land is now worth $400,000).
52. gain on sale of equipment
The amount by which the proceeds from the sale of equipment (that had been
used in the business) exceeded its carrying amount at the time it is sold.

53. gross
The amount before deductions. For example, gross pay is the amount before withholding
deductions. Gross sales is the amount before sales returns and allowances and sales
discounts.
54. goodwill
Goodwill is a long-term asset categorized as an intangible asset. Goodwill arises
when a company acquires another entire business. The amount of goodwill is the cost to
purchase the business minus the fair market value of the tangible assets, the intangible
assets that can be identified, and the liabilities obtained in the purchase. The amount in the
Goodwill account will be adjusted to a smaller amount if there is an impairment in the value of
the acquired company as of a balance sheet date.
55. gross profit percentage
56. Dollars of gross profit divided by the dollars of net sales. Also known as gross margin.
57. gross margin
A term that is sometimes used interchangeably with gross profit. Others use the
term to mean the percentage of gross profit dollars divided by net sales dollars.
58. net assets
The result of subtracting total liabilities from total assets. It is also the term used by
not-for-profit organizations instead of owner's equity or stockholders' equity.
59. net income
This is the bottom line of the income statement. It is the mathematical result of
revenues and gains minus the cost of goods sold and all expenses and losses (including
income tax expense if the company is a regular corporation) provided the result is a positive
amount. If the net amount is a negative amount, it is referred to as a net loss.
60. net credit sales
The net amount of gross sales on credit minus the sales returns, sales allowances,
and sales discounts which pertain to the sales on credit.
61. net current assets
Current assets minus current liabilities.
62. net sales
Net sales is the gross amount of Sales minus Sales Returns and Allowances, and
Sales Discounts for the time interval indicated on the income statement.

63. market share

A company's sales in a market as compared to the total sales in that market. For
example, General Motors share of the U.S. market has decreased from more than 50% in the
1960's to its present market share of less than 30%.
64. markup
This could be the difference between cost and the selling price. For example, a
retailer may markup its cost by 50% to arrive at a selling price. In the retail method of costing
inventory, markup is used to mean the "additional" markup from the original selling price. For
example, an item with a cost of $10 might normally be priced at $15. However, because of
the shortage of this item and because of high demand, the retailer sets a selling price of $17.
Sometimes markup means the $7, but sometimes it means the additional markup of $2.
65. mortgage
A lien on real estate to protect a lender. The loan made with such security is
referred to as a mortgage loan.
66. useful life
This is the period of time that it will be economically feasible to use an asset.
Useful life is used in computing depreciation on an asset, instead of using the physical life.
For example, a computer might physically last for 100 years; however, the computer might be
useful for only three years due to technology enhancements that are occurring. As a
consequence, for financial statement purposes the computer will be depreciated over three
years.
 67. timing differences
Temporary differences between the reporting of a revenue or expense for financial
statements (books) and the reporting of the item for income tax purposes. For example, it is
common for companies to depreciate equipment on the financial statements over a ten-year
period using the straight-line method. However, for income tax purposes the company uses
the IRS's seven-year, accelerated depreciation method. Eventually, the total depreciation will
be the same; however, each year for ten years there will be differences due to the timing of
the depreciation.
68. turnover ratios
A ratio consisting of an income statement account balance divided by the average
balance of a balance sheet account. For example, the inventory turnover is computed as
follows: Cost of Goods Sold divided by the average Inventory balance. The Accounts
Receivable turnover is Sales divided by the average Accounts Receivable balance
69. time value of money
The recognition that a dollar in the present is more valuable than a dollar in the
future. Present-value calculators and present-value tables assist in converting future dollars
to the present value in order to make a prudent decision
70. tax depreciation
The depreciation used on a company's income tax return. Usually this is different
from the depreciation used on the financial statements.
71. unamortized bond discount
A contra liability account containing the amount of discount on bonds payable that
has not yet been amortized to interest expense
72. sales
A revenue account that reports the sales of merchandise. Sales are reported in the
accounting period in which title to the merchandise was transferred from the seller to the
buyer.
73. semi-monthly
Occurring twice per month. For example, if salaried personnel are paid on the 15th
and the last day of the month, we would say they are paid semimonthly. People paid
semimonthly will receive 24 paychecks during a year. (People paid every two weeks—such
as every other Thursday—are said to be paid biweekly and will receive 26 paychecks during
the year).
74. stockholder
Also referred to as a shareholder. The owner of shares of stock in a corporation.
Every corporation has common stock and those owners are known as common stockholders.
Some corporations also issued preferred stock and those corporations will have both
common stockholders and preferred stockholders.
75. statement of cash flows
One of the main financial statements (along with the income statement and balance sheet). The
statement of cash flows reports the sources and uses of cash by operating activities, investing
activities, financing activities, and certain supplemental information for the period specified in the
heading of the statement.

76. sold
Transfer of an asset's title from seller to buyer for a stated amount. The transfer/sale occurs at the
shipping point (if terms are FOB shipping point), at the time when the item reaches the
destination (if terms are FOB destination), or at some other agreed upon terms.
77. Capital: The owner's or owners' rights to assets of a business.
78. Cash basis: An accounting method where transactions are recorded when the actual
change of payment occurs, regardless of when the goods or services are delivered.
79. Cash equivalents: Highly liquid short-term investments. Examples include money-
market funds and treasury bills.
80. Certified Financial Statements:
Financial statements that have been audited and certified by a CPA.
81. Chart of accounts: A numerical listing of a business’s accounts.
82. Closing Entries: Journal entries made at the end of the period to return the balance
in all accounts to zero and ready the account for the next reporting period..
83. Contra account: An account that follows another account and has a balance
opposite of it. For example accumulated depreciation is a contra asset account; it would have a
credit balance and be subtracted from the asset's debit balance to obtain the book value or
carrying amount of the asset.
84. Credit: An entry on the right side of an account - decreases assets or increases
liabilities.
85. Accelerated Depreciation
Accelerated depreciation is a form of depreciation where larger amounts of depreciation
are calculated in the first few years.
86. Account
An account is the physical record of the transactions incurred related to an asset, liability,
revenue, expense etc.
87. Accounts Analysis
Accounts analysis is a method of cost behavior analysis by classifying records under two
heads: fixed or variable.
88. Accounting Event
An accounting event is any event where there is a change (increase/decrease) in value of
the assets, liabilities or owner equity.
89. Accounting Income
Accounting income is the income earned by the business over the accounting year on an
accrual basis.
90. Accrued Revenue
Accrued revenue is revenue that has been earned but not yet received.
91. Accumulated Amortization
Accumulated amortization is the accumulated charges against the intangible assets
owned by the business.
92. Accumulated Depreciation
Accumulated depreciation is the charges incurred for the wear and tear of a fixed asset
that is calculated periodicall
93. Financial Accounting
Financial Accounting is the process of recording all the transactions of the business for
reporting and analysis
94. Financial Analysis
Financial analysis is the process to analyze the financial statement of a company
95. Financial Cash Flow
Financial cash flow is the cash flow which is generated by the assets of the firm and how
96. GAAP
GAAP is the acronym for Generally Accepted Accounting Principles, which is an
accepted set of accounting procedures, policies and rules. Read on for more about the
U.S. GAAP – Generally Accepted Accounting Principlesthose funds are distributed to the
shareholders.y.
97. Gross
Gross is an amount before any deductions or additions are made to it.
98. Gross Debt
Gross debt is the total of all the debt obligations of the business.
99. Gross Margin
Gross Margin is used synonymously with Gross Profit or Gross Profit Ratio.
100. Holding Company
A holding company is one that holds more than 50% stake in another company (known
as subsidiary company).
101. Industry Analysis
Industry analysis is the analysis of the financial performance of an industry as a whole.
102. Liquidity Ratio
Liquidity Ratio = (Cash + Marketable Securities) / Current Liabilities