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We have put together a list of words and phrases you might hear in the accounting world so you can confidently talk to your accounting team.
Here are the top 40 key accounting terms
1. Accounts Payable: Amounts owed by a business to suppliers and other creditors for goods and services purchased on credit.
2. Accounts Receivable: Amounts owed to a business by its customers for goods or services provided on credit.
3. Accrued Expenses: Expenses that have been incurred but not yet paid.
4. Aged Payables: A list of accounts payable categorized by how long the bill has been outstanding.
5. Amortization: A method of spreading the cost of an asset over a period of time.
6. Audit: A systematic review of a business’s accounts payable records to ensure accuracy and compliance with internal and external policies.
7. Bank Reconciliation: The process of comparing the bank statement balance to the general ledger balance to ensure accuracy.
8. Cash Discount: An incentive offered by a vendor to encourage payment within a certain time period.
9. Chart of Accounts: A list of all accounts used in a business’s accounting system.
10. Credit Memorandum: A document used to adjust the balance in an accounts payable account.
11. Credit Terms: The terms of payment that apply to a specific vendor or customer.
12. Creditor: A person or entity to whom money is owed.
13. Disputed Bill: An invoice that has been questioned by the receiving business due to discrepancies.
14. Early Payment Discount: An incentive offered by a vendor to encourage early payment.
15. Expense Report: A document detailing the expenses incurred by an employee in the course of their job.
16. Invoice: A document sent to customers for goods or services provided on credit.
17. Matching Principle: An accounting principle that requires expenses to be matched with the revenue they generate.
18. Payment Authorization: A document authorizing the payment of an invoice.
19. Payment Hold: A temporary suspension of payment on an invoice, usually due to discrepancies.
20. Payment Plan: An agreement between a business and a vendor outlining the schedule of payments.
21. Petty Cash: A small fund used to pay for minor expenses.
22. Purchase Order: A document sent to a vendor outlining the goods or services to be purchased.
23. Reconciliation: The process of comparing two or more accounts to ensure accuracy.
24. Red Flag: A warning sign indicating a potential problem with an invoice or vendor.
25. Reserve Account: An account set aside to cover potential losses due to bad debts.
26. Retention: A portion of an invoice that is withheld until the goods or services are deemed satisfactory.
27. Sales Tax: A tax imposed on the sale of goods or services.
28. Statement of Account: An itemized list of all transactions between a business and a vendor or customer.
29. Supplier: A person or entity from whom goods or services are purchased.
30. Terms of Payment: The conditions under which an invoice must be paid.
31. Vendor: A person or entity from whom goods or services are purchased.
32. Vendor Master File: A file containing all the information related to a vendor, including payment terms and contact information.
33. Write-off: The process of removing an invoice from the accounts receivable due to an inability to collect payment.
34. 1099 Form: A document used to report payments made to vendors who are not employees.
35. Accrual Accounting: An accounting method that records transactions when they occur, regardless of when payment is actually received.
36. Cash Accounting: An accounting method that records transactions when cash is received or paid out.
37. Contingent Liability: A potential liability that may become due depending on the outcome of a future event.
38. General Ledger: A record of all the transactions in a business’s accounts.
39. Late Fee: A charge imposed for late payment of an invoice.
40. Petty Cash Fund: A fund set aside for small, unanticipated expenses.
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