Basic Terms of Financial Accounting
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Accounting — the process of recording, assessing, and communicating financial transactions — helps individuals and organizations understand their financial health. Accountants do this work by keeping track of expenses, profits, and losses, making use of this accounting formula:
Assets = Liability + Equity
Effective accountants ensure that their organizations understand their legal obligations and financial performance, and that they can develop budgets and plan for the future. Managers use accounting information to make decisions related to buying or selling, investing, and pricing.
The following guide includes basic accounting terms, definitions, and industry acronyms. Business owners can use this accounting dictionary to better understand their financial records and when working with accountants or accounting software. Prospective students can use the directory of terms to familiarize themselves with basic concepts. Accounting majors can even use this lecture as a study guide.