Accounting Vocabulary

An item that a company or person owns that has monetary value. These come in the form of tangible (typically physical owned by the company, such as property, equipment and land) and intangible (not physical in nature, such as patents, copyright, goodwill and trademarks).

• Assets

• Liabilities

represents a company’s goods that remain unsold to its customers. Inventory management is typically counted within three stages of production: raw goods, in-progress goods and goods that are ready for sale.

• inventory

• Liabilities

The total value of a business’ assets found on the balance sheet. This number represents the total value of all of the assets a company owns if they are liquidated (sold to generate cash).

• Equity

• Book Value

An item that a company or person owns that has monetary value. These come in the form of tangible assets (typically physical assets owned by the company, such as property, equipment and land) and intangible assets (assets not physical in nature, such as patents, copyright, goodwill and trademarks).

• Assets

• Liabilities

Money that is owed by the business to its suppliers. This is shown up as a liability in the balance sheet

• accounts payable

• accounts receivable

Money that is owed to the business by its customers. This is for goods or services that have been delivered but have not yet been paid.

• Assets

• Accounts Receivable

it is when an asset loses value over time. It is commonly happens when physical assets break or wear out, such as when an office computer gets damaged, a machine breaks down, or a building starts to decay. Land is the only physical asset that appreciates (increases in value) over time.

• Depreciation

• Liabilities

The income a business makes from its activities, before subtracting any expenses. This usually comes in the form of sales and services to customers. It is also referred to as “sales” or “turnover”.

• revenue

• fixed cost

these are money spent by a business in order to generate revenue. these are the sum of all activities that a business is using to try and reach a profit. These are split into fixed expenses, set amounts that a business has to pay regularly (rent, salaries, wages) which might cost more or less depending on external factors (advertising, commission, utility bills).

• gross profit

• expenses

The amount that is earned by a business in profits, after all costs are deducted. It is calculated by taking revenue and subtracting all of the expenses within a period of time, including overheads, depreciation, and taxes.

• net income

• revenue