The Basic Terms Used In Accounting

The Basic Terms Used In Accounting

If you are new to accounting, you might be wondering what some of the most common terms mean. Let’s take a look at some of these terms. In this article, you’ll learn about General Ledger, Income statements, Accounts payable, and Balance sheets. You’ll also learn what these terms mean in context. If you’re new to the accounting firm in Dubai, you may also want to check your accounting vocabulary. Then, you’ll need to familiarize yourself with other terms and phrases that appear in context.

General Ledger

In general ledger accounting, the general ledger lists all accounts and their respective balances. Each account is named and has a code. For small businesses, there may be several hundred GL codes. These codes help reduce the chances of accidentally assigning an entry to the wrong account. Accounts may be categorized by types, such as income or expense. The codes will be arranged in order of cash or due.

Income statement

You may be wondering what the income statement means. It is the document that summarizes a business’s financial activities. A business has two types of income statements: current and non-current. Both income and expenses are recorded on the income statement. Current liabilities are those due within a year, while non-current liabilities have a longer period before they must be paid. You will find both income and non-current liabilities at the top and bottom of your financial statement.

Accounts payable

If you’re considering pursuing a career in accounting, you may be interested in learning some of the basic terms that make up your bookkeeping vocabulary. Accounts payable are amounts owed to vendors and suppliers. These types of debt are classified as a liability and are a major part of any business’s financial record. Many small businesses do not have the resources to invest in formal financial training, so the basic terms and concepts that you should understand are key to the success of your business venture.

Balance sheet

To better understand how to read financial statements, it’s important to understand the terms used. For example, a balance sheet is a statement that compares an entity’s assets, equities, and liabilities. It’s important to understand how these items affect a company’s balance sheet, as it provides an overall picture of the organization’s financial health. However, creating a balance sheet is not always easy, as assets must equal liabilities. In addition, an average small-business owner may not even bother to track all of their assets. As a result, their balance sheet may look untidy, while a more elaborate one may be more complex.