Basic Accounting Terms

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Accounting

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The communication of Financial Information so that users can make informed decisions.

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Income

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Money received from employment, investments, or interest.

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Expenses

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What a business pays in the day-to-day running of the business.

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Essential

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Spending on items that are absolutely necessary - Needs.

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Non-Essential

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Spending on items that are not necessary - Wants.

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Saving

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An amount of money that is not spent and set aside for the future.

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Surplus

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When income is greater than expenses.

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Deficit

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When expenses are greater than income.

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Budget

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A plan of expected income, expenses, and savings for a period of time.

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Debt

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Owing money or buying on credit.