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ACCOUNTING VOCABULARY ACCOUNTING is primarily a system of measurement and reporting of economic events based upon the accounting equation

for the purpose of decision making. Generally, when someone says "accounting" they are referring to the department, activity or individuals involved in the application of the accounting equation. ASSET is anything owned by an individual or a business, which has commercial or exchange value. Assets may consist of specific property or claims against others, in contrast to obligations due others. (See also Liabilities). TAX is a charge against a legal entity's person or property or activity for the support of government, e.g. income taxes, sales taxes, duties and levies. CASH is money, in the form of notes and coins, which constitutes payment for goods at the time of purchase. BALANCE is: a. equality between the totals of the credit and debit sides of an account; or, b. the difference between the totals of the credit and debit sides of an account. INVOICE is a detailed list of goods shipped or services rendered, with an account of all costs; an itemized bill. CREDIT, in accounting, is an accounting entry system that either decreases assets or increases liabilities; in general, it is an arrangement for deferred payment for goods and services. INCOME is the amount of money or its equivalent received during a period of time in exchange for labor or services, from the sale of goods or property, or as profit from financial investments. SALES is income (at invoice values) received for goods and services over some given period of time. SALARY is scheduled wages and benefits an employee receives from an employer. A CHECKING ACCOUNT is a bank account that uses checks as the primary instrument for withdrawing money. With a checking account, you can make purchases, pay bills, and give or loan money to anyone you choose. You can also use a check to transfer money from your checking account to a bank account at a different financial institution. Usually, financial institutions allow account holders to make as many deposits and withdrawals as they wish. Many allow account holders to make withdrawals and deposits through automatic teller machines (ATM) as well. A SAVINGS ACCOUNT is another type of bank account that allows the holder to make deposits and withdrawals. However, savings accounts are not as flexible as checking accounts. Often, holders of this type of bank account are limited in the number of withdrawals and deposits they can make each month. Also, savings account holders are not able to access their money with checks. Many financial institutions allow savings account holders to make deposits and withdraw funds through ATM, however.
LIABILITY, in insurance, is a term used when analyzing insurance risks that describes possible areas of financial exposure / loss. Presently, there are three forms of liability coverage that insurers will underwrite: The first is general liability, which covers any kind of bodily injury to non-employees except that caused by automobiles and professional malpractice. The second is product liability, which covers injury to customers arising as a direct result of goods purchased from a business. The third is public liability, which covers injury to the public while they are on the premises of the insured.