The terms listed below are related to basic accounting. And which may be beneficial if you are a newbie. These definitions are from a document that I reviewed in order to fully understand.
Accounting – when a company makes money, it has to keep track of where that money came from and where it goes.
Accurate Accounting -A technique of bookkeeping that records transactions at the time that they take place, rather than when the money is collected or paid.
Cash basis accounting – A method of accounting that records transactions when the money is received or paid, not when they happen.
Income – money that you make from working or selling things. ex: if you sell a chocolate and made rupees 10.
Expenses – Money you spend on things you need to run your businesses. ex: you buy ingredients to make chocolate and and it costs rupees 5.
Profit – (Income – Expense = profit)
Asset – Something You Own That Has Value
Liabilities – Money that you owe to others.
Equity – The difference between your assets and liabilities.
Revenue – Total amount of money coming into your business.
Accounts Payable – Money you owe to others for goods or services you’ve received but haven’t paid for yet.
Accounts Receivable – Money others owe you for goods or services you’ve provided, but haven’t been paid for yet.
Debits and credits – These marks are called debits and credits and they help the company make sure it has the right amount of money and things.
Income Statement – It shares how much money the company made and how much it spent.if it made more than it pent, it has some extra money called profit.
Statement of cash flows – The statement of cash flows shows where the company’s money came from and where it met.
General Ledger – When the company buys or sells something or pays or gets paid, it has to make two marks in its special book called general ledger.
Balance Sheet – it shows how much a company has, how much it owes and how much is left for the owner of the company.
Charts of accounts – The company also has a list of all things it can put in its special book and each thing has its own special number.
Cost of goods sold – The cost of the materials used to make what you’re selling. ex: you spend rupees 100 to make cake
Operating Expenses – The costs of running your business, not including cost of goods sold.
Gross profit – The amount of money you have left over after subtracting cost of goods sold from revenue.
Net Income – The amount of money you have left over after subtracting operating expenses from gross profit.
Depreciation – The decrease in value of an asset over time.
Tax – tax is money you pay to help the government do things like buildroads, schools and keep people safe.