Accounting Terms For QuickBooks

Accounting Terms For QuickBooks
February 14, 2018 0 By QuickBooks Proadvisor Certified

Understanding Accounting Terms

We are going to review some accounting terms that will be important to understand when working with QuickBooks and especially working with your accountant.

Accounts Payable   Accounts of money you owe.  A liability that is usually created when you’ve made a purchase on credit.

Accounts Receivable  Accounts of money owed to you for the sale of goods or services.

Accrual basis   A method of accounting where transactions are recorded as they occur regardless of when payment for that transaction is made or received

Accrued Assets   Assets from revenues earned but not yet received.

Accrued Expenses   A liability incurred during the accounting period for which payment has not been made.

Accumulated Depreciation  The running balance of the depreciation taken on an asset.

Accounts Receivable  Accounts of money owed to you for the sale of goods or services.

Aging  The grouping of like transactions by date. Example – sorting invoices by due date.

Adjusting Entries  Special accounting entries that are made when you close the books at the end of an accounting period to bring the ledger up to date.

Asset  Items that a business or individual owns or are owed.

Audit  The scrutinizing of accounting records and supporting documents for accuracy and completeness.

Audit trail  The information within the accounting system that reveals the effects of a transaction.

Bad Debt  An account or receivable that has been deemed unrecoverable and written-off.

Badwill (Negative Goodwill)  The excess amount of fair value of an asset or assets over the purchase price.

Balance Sheet  A statement listing the total assets, liabilities, and owners’ equity; indicating the net worth of the company for the given time period.

Bonds Payable  A long-term liability that represents a promise to pay a sum of money plus interest at a maturity date (a designated date in the future).

Book Value of an Asset  Cost of the asset (the amount that was paid for it) minus accumulated depreciation.

Capital  The owner’s or owners’ rights to assets of a business.

Cash basis  An accounting method where transactions are recorded when the actual change of payment occurs, regardless of when the goods or services are delivered.

Cash equivalents  Highly liquid short-term investments.  Examples include money-market funds and treasury bills.

Certified Financial Statements  Financial statements that have been audited and certified by a CPA.

Chart of accounts  A numerical listing of a business’s accounts.

Closing Entries  Journal entries made at the end of the period to return the balance in all accounts to zero and ready the account for the next reporting period..

Contra account  An account that follows another account and has a balance opposite of it.  For example accumulated depreciation is a contra asset account; it would have a credit balance and be subtracted from the asset’s debit balance to obtain the book value or carrying amount of the asset.

Credit  An entry on the right side of an account – decreases assets or increases liabilities.

Debit  An entry on the left side of an account – increases assets or decreases liabilities.

Depreciation  The allocation of the cost of a tangible, long-term asset over its useful life.

Dividends  Distributions by a corporation to its shareholders.  Dividends decrease both the assets and retained earnings of the corporation.

Expenses  The daily costs incurred in running a business.

Extraordinary Gain or Loss  A gain or loss that is both unusual and infrequent.

Finished Goods Inventory  Completed goods held in inventory that have not yet been sold.

Fiscal  A 12 month accounting period. Not necessarily a calendar year.

Form 941  The IRS form filed quarterly to report income tax, FICA, and Medicare withholdings.

Form 1099  An IRS form sent to certain vendors whom you have paid more than $600 during the year. Also ForoeBooks will help to file 1099 just connect QuickBooks Payroll Support Number by dialling toll free

General Ledger  The master record of all the balance sheet and income statement account balances.

General partnership  A partnership form of business where each partner is a part owner and shares in the privileges and risks of ownership.

Gross profit  The amount of net sales minus the amount of cost of goods sold (also called cost of sales).

Income statement  A statement that summarizes revenues and expenses.

Intangibles  Assets that have no physical form but that have value.  Examples are copyrights and patents.

Invoice  A form, sent from the seller to the buyer, listing the items bought, price, terms etc. Having issues generating invoices call QuickBooks Support Number now ,jut dial ForoeBooks toll free

Journal  A chronological record of transactions, also known as the book of original entry.

Just-in-Time  A system where items are produced or received just in time to be used or sold.

Ledger  A book containing accounts to which debits and credits are posted from books of original entry.

Liability  A debt or obligation.

Net sales  The amount left when returns, discounts, and allowances are deducted from sales revenue.

Note payable  A written promise to pay a determined amount in the future.

Operating Expenses  The expenses that are incurred from the daily operation of the business.

Owners’ equity  The owners’ right to the assets of an entity.

Prepaid Expenses  Amounts that are paid in advance for product is not used up during the accounting period.

Post  The process of transferring amounts from a journal to the appropriate ledger accounts.

Purchase order  Written instructions to a vendor to ship and bill for the listed items.

Retained earnings  Capital earned operations of the corporation.

Reversing Entry  An entry made to reverse a prior entry.

Revenue  Amounts earned by delivering goods or services to customers.

Trial Balance: A work sheet showing the balances in each account used to prove equality of debits and credits