Account
Formal record that represents, in words, money or other unit of measurement, certain resources, claims to such resources, transactions or other events that result in changes to those resources and claims. You can have asset, liability, capital (equity), revenue and expense accounts. All of these accounts together make up the general ledger.
Accounts Payable
Amount owed to a creditor for completed services.
Accounts Receivable
Amount billed to client but not yet paid.
Asset
Resources belonging to a person or business, tangible or intangible. Includes accounts receivable, cash, inventory, equipment, good will, etc.
Assets = Liabilities + Owners Equity
Balance
Sum of debit entries minus the sum of credit entries in an account. If the debits are higher, there is a debit balance; if the credits are higher, there is a credit balance.
Balance Sheet
Basic financial statement presenting an entity's assets, liabilities, and the owners’ equity as of a specified date.
Bill
An itemized statement of charges for services sent to your clients.
Budget
Financial plan that serves as an estimate of future cost and revenues.
Calendar Year
Period of 12 consecutive months starting in January and ending in December.
Credit
Entry on the right side of a double-entry bookkeeping system that represents the reduction of an asset or expense or the addition to a liability, equity, or revenue account.
Debit
Entry on the left side of a double-entry bookkeeping system that represents the addition of an asset or expense or the reduction to a liability, equity, or revenue account.
Disbursement
Payment by cash, check, debit card, or automatic withdrawal.
Double-Entry Bookkeeping
Method of recording financial transactions in which each transaction is entered in two or more accounts and involves two-way, self-balancing posting. Total debits must equal total credits.
Fiscal Year
Period of 12 consecutive months chosen by an entity as its accounting period which may or may not be a calendar year.
General Ledger
Collection of all asset, liability, owners’ equity, revenue, and expense accounts.
Income Statement
Summary of revenues and expenses over a period of time. Shows profit or loss.
Invoice
An itemized statement of charges for services sent to you for payment.
Journal
Any book containing original entries of daily financial transactions. Also called ledger.
Ledger
Any book of accounts containing the summaries of debit and credit entries. Also called journal.
Liability
Debts or obligations owed by the debtor to the creditor.
Receivable
Amount of money due from customers or other debtors.
Revenues
Sales of products, merchandise, and services; and earnings from interest, dividend, rents.
Trust
Ancient legal practice where one person (the grantor) transfers the legal title to an asset, called the principle or corpus, to another person (the trustee), with specific instructions about how the corpus is to be managed and disposed.
Trustee
Person who is given legal title to and management authority over the money or property placed in a trust.