Glossary
Audit:
An independent examination of an organization’s financial records to determine their accuracy and compliance with established standards.
Accounting:
The process of recording, classifying, and summarizing financial transactions to provide information that is useful in making business decisions.
Balance Sheet:
A financial statement that shows a company’s assets, liabilities, and equity at a specific point in time.
Income Statement:
A financial statement that shows a company’s revenue and expenses over a specified period of time, usually a month or a year.
Cash Flow Statement:
A financial statement that shows the movement of cash into and out of a business over a specified period of time.
Ledger:
A record of financial transactions for a company, usually organized by account.
Journal:
A record of financial transactions, usually organized chronologically.
Accrual:
An accounting term that refers to revenue or expenses that have been earned or incurred but not yet received or paid.
Depreciation:
The systematic allocation of the cost of a long-term asset over its useful life.
Amortization:
The systematic allocation of the cost of an intangible asset over its useful life.
Accounts Receivable:
An asset account that represents amounts owed to a company by its customers.
Accounts Payable:
A liability account that represents amounts owed by a company to its suppliers.
General Ledger:
A record of all financial transactions for a company, usually organized by account.
Trial Balance:
A listing of all of a company’s accounts and their balances, used to ensure that the total of all debits is equal to the total of all credits.
Financial Statements:
A set of financial reports that provide information about a company’s financial performance and position.
Internal Control:
Procedures and processes put in place to ensure the accuracy and reliability of a company’s financial information and to protect its assets.
Fraud:
An intentional misstatement or omission of information in order to deceive others.
Auditing Standard:
A set of guidelines that auditors use to perform their work and evaluate the financial information of an organization.
- Inventory – the stock of goods a company holds for sale.
- Investment – the purchase of assets with the expectation of earning income or capital gains.
- Journal Entry – a record of a financial transaction in a company’s accounting records.
- Ledger – a record of all financial transactions in a company.
- Liabilities – the debts and obligations of a company.
- Loan – a sum of money borrowed by a company.
- Management Accounting – the process of identifying, measuring, analyzing, interpreting, and communicating financial information to support decision making and control.
- Net Income – a company’s total revenue minus its expenses.
- Payroll – the process of paying employees for their work.
- Profit and Loss Statement – another name for an Income Statement.
- Profit Margin – a measure of a company’s profitability that shows the percentage of revenue that is left after expenses have been paid.
- Public Accounting – the practice of accounting by a professional accountant or firm for clients outside of their own organization.
- Receivables – money owed to a company for goods or services that have been sold but not yet paid for.
- Recording – the process of documenting financial transactions in a company’s accounting records.
- Revenue – the income received by a company from its operations.
- Shareholder Equity – the amount of a company’s assets that is owned by its shareholders.
- Solvency – the ability of a company to meet its financial obligations as they come due.
- Statement of Cash Flows – a financial statement that shows the inflow and outflow of cash over a specified period of time.
- Stock – ownership in a company.