The terminology of Financial Accounting means that terms which are used by the accountant to communicate the financial position of the business to the owner of the business.
Financial accounting is known as business language, So it has its own terminology for everything used in the business. So, Every commerce student or professional should know the terminology of financial accounting, because it makes easy to understand the accounting. You can divide these terms into the following categories: –
The Categories of Terminology: –
- Balance Sheet terms
- Income Statement or Profit and loss account terms
- Other general Financial Accounting terms
1. Balance Sheet terms:
Balance Sheet terms mean those terms which are used while preparing the balance sheet of the business. These are shown below and these all terms are explained with the separate article.
The assets are those valuable things or properties which the business or individual owns and get the benefits from it in ...Read More
Those assets on which the business will get benefits for a long period of time i.e. minimum of one year are ...Read More
Those assets which are used or utilized within the period of one year are known as Current Asset. These are also ...Read More
The Fictitious word, itself says "fake". So Fictitious Assets are not an asset in the true sense but this is a ...Read More
Those assets which can be touch, feel, and see are called Tangible assets. in other words, all those assets which have ...Read More
Those assets which cannot be touch, feel, and see are called intangible assets. in other words, all those assets which don't ...Read More
2. Income Statement or Profit and loss account terms:
Income Statement or Profit and loss account terms means those terms which are used while preparing Income statement of the business. These are shown below and these all terms are explained with the separate article.
Cost of Goods Sold (COGS) is that amount of expenses which are directly related to the process of the manufacturing of ...Read More
Expenditure means that amount which has spend or will be spent by business on the purchase of goods and to avail ...Read More
Purchase means getting the ownership of any goods or assets, by paying the predetermined price of them. It may be in ...Read More
The sale means giving the ownership of any goods or assets, by receiving/will be received the predetermined price of them. It ...Read More
Expenses mean the amount spent by the business for running the business operation. The expenses are also known as Revenue Expenditure ...Read More
Incomes mean the amount earned by the business from the business operation and other activities. Income is also known as Revenue ...Read More
2. Other accounting terms:
These are shown below and these all terms are explained with the separate article.
Meaning of Debit is adding an amount of cash or fund into the expenses or assets accounts and subtracting from ...Read More
Meaning of Credit is adding an amount of cash or fund into the owner's equity, liabilities or income accounts and ...Read More