The Wren Group, Inc. - Glossary of Accounting Terms || Your Local QuickBooks Pro Advisor

Glossary of Accounting Terms

Accounts Payable - Accounts of money you owe. A liability that is usually created when you have made a purchase on credit.

Accounts Receivable - Accounts of money owed to you for the sale of goods or services.

Accrual Basis - A method of accounting where transactions are recorded as they occur regardless of when payment for that transaction is made or received.

Accrued Assets - Assets from revenues earned but not yet received.

Accrued Expenses - A liability incurred during the accounting period for which payment has not been made.

Accrued Income - Income earned during an accounting period but not received or recorded by the end of the period.

Aging - The grouping of like transactions by date. Example - sorting invoices by due date.

Adjusting Entries - Special accounting entries that are made when you close the books at the end of an accounting period to bring the ledger up to date.

Asset - Items that a business or individual owns or are owed.

Audit - The scrutinizing of accounting records and supporting documents for accuracy and completeness.

Audit Trial - The information within the accounting system that reveals the effects of a transaction.

Bad Debt - An account or receivable that has been deemed unrecoverable and written-off.

Balance Sheet - A statement listing the total assets and liabilities, indicating the net worth of the company for the given time period.

Capital - The right to assets of the owner of a business.

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.

Certified Financial Statements - Financial statements that have been audited and certified by a CPA.

Chart of Accounts - A numerical listing of a businesses accounts.

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.

Credit - An entry on the right side of an account - decreases assets or increases liabilities.

Debit - An entry on the left side of an account - increases assets or decreases liabilities.

Depreciation - The allocation of the cost of a tangible, long-term asset over the useful life.

Expenses - The daily costs incurred in running a business.

Fiscal - A 12 month accounting period. Not necessarily a calendar year.

General Ledger - The master record of all the balance sheet and income statement account balances.

Gross Profit - The amount of net sales minus the amount of cost of sales.

Income Statement - A statement that summarizes revenues and expenses.

Invoice - A form, sent from the seller to the buyer, listing the items bought, price, terms etc.

Journal - A chronological record of transactions, also known as the book of original entry.

Ledger - A book containing accounts to which debits and credits are posted from books of original entry.

Liability - A debt or obligation.

Net Sales - The amount left when returns, discounts, and allowances are deducted from sales revenue.

Operating Expenses - The expenses that are incurred from the daily operation of the business.

Owners Equity - The owners right to the assets of an entity.

Prepaid Expenses - Amounts that are paid in advance for product is not used up during the accounting period.

Post - The process of transferring amounts from a journal to the appropriate ledger accounts.

Purchase Order - Written instructions to a vendor to ship and bill for the listed items.

Reversing Entry - An entry made to reverse a prior entry.

Trial Balance - A work sheet showing the balances in each account - used to prove the equality of debits and credits.

The Wren Group, Inc. is an independently owned and operated business located in Loganville Georgia and provides accounting and bookkeeping services for Barrow, Walton, and Gwinnett counties. As a QuickBooks Pro Advisor®, we have extensive knowledge and experience with the use of QuickBooks software for small business management. All images, descriptions, and text on this web site are the sole property of The Wren Group, Inc. Copy or use of the images and descriptions from this web site without prior written permission from The Wren Group, Inc. is strictly prohibited.

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