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Common Accounting Terms Explained!

January 28, 2021

As they say, knowledge is power, so it only makes sense that the more you know, the more powerful you become! Bring that knowledge and power over to your books, even if you’re not the one working on them every day. We’ve compiled some accounting and bookkeeping terms that are commonly used but may not be commonly known. You should know what your books and your accountant are telling you, and that starts with breaking down some of the key terms. If you run into a term you’re unfamiliar with, always ask your accountant. 

Accounts Payable

A/P includes all of the expenses that a business has incurred but not yet paid. This is recorded as a liability on your Balance Sheet, since it’s a debt owned by the company. 

New To Your Books? Terms You Need To Know

SkynarBookkeeping / May 8, 2019

If you’re just starting to navigate your books, you may be unsure of some of the lingo. It’s like a different language for those outside of the accounting world, but the more you work with your books, the quicker you’ll catch on. What’s important is to think of everything in terms of your business; these terms provide you with vital information about your company’s standing. Let’s go over some common terms you’ll frequently hear and need to use in order to discuss and understand your books.

Accounting Terms You Need To Know

SkynarBookkeeping / December 20, 2018

Whether you run your own business or just work on the books, it’s imperative to know all the lingo. When you work on your books, these factors will tell you quite a bit about your business’s financial health. We know there seem to be an infinite number of terms in the accounting and bookkeeping world. It’s almost like a different language!

 

What Did My Accountant Just Say?

SkynarBookkeeping / September 20, 2017
By: Rachel Raupp

Have you ever left a conversation with your accountant with nothing but confusion, asking yourself “What did they just say?” You’re not alone. We’re here to bridge the gap between accountant and client. Here is a list of common terms you will likely here from your accountant, if you haven’t already, and what they actually mean:

Accounts Payable (A/P): Money you owe to others.

Accounts Receivable (A/R): Money others owe to you.

Asset: Items of value owned by a business. This includes money in your bank, A/R, equipment, vehicles, buildings, and so on.

Bad Debt: Uncollectible A/R.

Balance Sheet: A list of company assets, liabilities and equities for the company.

Cost of Goods Sold (COGS) (a.k.a. Cost of Sales—COS): What it directly costs to produce your product or service. For manufacturing companies, this includes raw materials and the direct labor to make your product. For service companies, this includes the cost of labor to directly service your customer.

Equity: How much you have invested into your business or taken out of your business. This is where any profit from your business will show up.

Liability: This includes all the debts you owe to other businesses, such as A/P, credit cards and loans.

Profit and Loss Report (a.k.a. Income Statement): This shows you how well (or not) the business did for a specific time period (month/quarter/year).

Next time you speak with your accountant,