What Are Common Terms Used in the Accounting Field?

What Are Common Terms Used in the Accounting Field?

There is no shortage of accounting-related terms, and if you work in the accounting field, you are most likely acquainted with all of them. If you are planning to pursue a career in accounting, there are a few basic terms that you should be familiar with.

An accountant is an individual who is trained in logging and reporting financial transactions. He or she might report to various people within an organization, updating their team and/or clients on all financial situations. He or she may be the one who attends to tax-related matters as well.

An account payable is an amount owed to a creditor for products and/or services. In a clothing store, your account payable would refer to the price of a jacket or shoes. If you were living in an apartment, an account payable would refer to amount owed for rent.

An account receivable is a claim against a debtor for an unresolved amount. As an accountant, you are planning to obtain this debt. By doing so, you will achieve a balanced sheet. If this debt cannot be collected for a specific reason, it is labeled a bad debt. It will not be receivable.

This brings us to balance. Balance refers to a straightforward financial statement that reveals who owes what and who has paid their debt up to that point in time. The bottom line, comparably, refers to the financial statement that displays net income or loss from a specific date to another.

Everyone desires a positive cash flow. This necessitates that we have cash and we are spending less than we are being afforded. A cash flow refers to the net of cash receipts and cash disbursements in relation to a specific activity during a certain period of time.

A bookkeeper is often referred to as an accountant. While they might perform some of the same tasks, a bookkeeper’s primary job is to document the financial transactions of an organization. He or she will record incoming and outgoing finances in the hopes of preserving a balanced account and adequate cash flow.

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