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What is some common accounting terminology?

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Quick Answer

Common accounting terminology includes cash flow, cost of goods sold, generally accepted accounting practices and general ledger. Other terms are accounts payable, accounts receivable, balance sheet, assets and liabilities.

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Full Answer

Cash flow refers to the amount of money a company earns over a given period of time or from a specific event, which may be a positive or negative account. The cost of goods sold is the associated price of the items and materials a business needs to purchase to make its products, such as food ingredients for a restaurant or fabrics for a clothing manufacturer. Generally accepted accounting practices refers to a series of rules and regulations maintained by accounting and financial companies that dictates the proper method for completing various actions, some of which come from specific laws or legal requirements. A general ledger is a document that accountants use to track the expenses and revenues from a company over different periods of time.

Accounts payable is the department or entity that handles making payments to clients, vendors or business partners pursuant to existing contracts and obligations. Conversely, accounts receivable is the section of the company that processes incoming payments from customers or business partners. A balance sheet is a document that conveys the current financial state of the company by comparing income to debts or other owed amounts. Assets refers to all the property and finances of a company, including investments and credits, whereas liabilities are all of the company's expenses and debts.

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