ACCOUNTING TERMS

• Accounting is the art of analyzing, recording, summarizing, reporting, reviewing, and interpreting
financial information.

• Asset properties used in the operation or investment activities of a business.

• Audit an independent review of financial records to verify their accuracy.

• Capital it is also called equity.

• Credit an entry (amount) enters on the right side (column) of a journal or general ledger
account that increases a liability, owner's equity (capital) or revenues, or an entry that

decreases an asset, draw, or an expense.

• Creditor a person or organization that a business owes money.

• Debit an entry (amount) entered on the left side (column) of a journal ledger or general
ledger account that increases an asset, draw or an expense or an entry that decreases a

liability, owner's equity (capital) or revenue.

• Debtor customers that owe a business money.

• Fixed assets another name for property, plant, and equipment.

• Financial Accounting Standards Board independent group of full time members

responsible for setting accounting rules.

• Liability claims by creditors to the property (assets) of a business.

• Financial Accounting is a branch of accounting that is primarily concerned with the

measurement and communication of information that summarizes and reports the

financial condition and operating results of a business enterprise.

• Financial accounting provides as objectively as feasible the diverse information needs
of both the internal and external data-users who may have conflicting interests in the

business affairs.

• Management Accounting is the presentation of accounting data primarily for

management who are considered the internal users.

• Management Accounting provided the specific information needs of internal data-users,

principally the management.

• Government accounting which uses “Fund Accounting”, deals with the administration or
use of public funds to bring about service to the community.

• Government accounting is another career field where one works as accountant, auditor
budget officer or electronic data processing head of any of the government agencies.

• Auditing deals with independent verification and examination of the accounting records
for the purpose of giving an opinion on the fairness of its presentation.

• Tax accounting is the accounting process that focuses on tax issues including filing tax
returns and planning for future tax responsibilities as opposed to the preparation of

financial statements.

• Cost accounting deals with determining the costs of products, processes, projects, etc.
in order to report the correct amounts on the financial statements; and assisting

management in making decisions and in the planning and control of an organization.

• Cost accounting assists management by providing analysis of cost behavior, cost-

volume-profit relationships, operational and capital budgeting, standard costing, variance

analyses for costs and revenues, transfer pricing, activity-based costing, and more.

• Accounting Research is research on the effects of economic events on the process of

accounting, and the effects of reported information on economic events.
• Accounting education focuses in educating students and professionals alike about
accounting, auditing, taxation, and advanced accounting and business subjects.

• Certified Public Accountant (CPA) a professional who is licensed to perform an

independent audit of business enterprises or to render other forms of special accounting

services to his clients.

• External Auditor performs an audit, in accordance with specific laws or rules, of the
financial statements of a company, government entity, other legal entity, or organization,

and is independent of the entity being audited.

• External audit is an independent body which resides outside of the organization which it
is auditing.

• Controller is a person whose primary duties is to come up with accounting data that are
useful in controlling the business operations.

• Internal auditing an internal auditor is an employee of the business enterprise.

• Internal auditors have the responsibilities of evaluating the efficiency of operation and
determining whether the business' policies are being followed consistently in all

organizational levels of operations.

• Accountant is a person skilled in the recording and reporting of financial transactions.

• Bookkeeper is a person who records, and classifies the financial transactions of a

business.

• Bookkeeping is the process of recording and classifying business financial transactions

(activities).

• Budgeting preparing a report that forecasts (estimates) planned results for the future.

• Cost is defined as the cash amount (or the cash equivalent) given up for an asset.
• Fund Accounting deals with keeping records for funds of non-profit business entities.

• Management consultant provides services ranging from accounting system design,

review and installation to financial planning, budgeting and cost controls.

• Tax charge levied by a government unit on income, consumption, wealth, or other basis.

• Tax consultant a person skilled in tax matters and renders services such as tax
advising, planning and review.

• Taxable Earnings the amount of an employee's earnings subject to a tax.

• Taxable Income is generally equal to a taxpayer's adjusted gross income during the tax-
payer less any allowable exemptions and deductions.

• Tax payer is a person or organization (such as a company) subject to a tax on income.

• External users are those groups or persons who are outside the organization for whom
accounting function is performed.

• Creditors. Someone who has granted credit.

• Banks and Other Lenders. Aside from investors, the banks and other lenders provide
the short-term and long-term financial needs of the borrower. A lender needs information

that will help in assessing the safety of his investment, or the risk involved in his lending

exposure.

• Investors. The investors provide the capitalization needed by the business enterprise,
and as a result, they are usually exposed to higher risks compared with the other interest

groups.

• Suppliers. The Supplier offers goods or merchandise on cash basis or on credit term
depending on the paying ability of the customer (business).
• Customers and clients. The customers of the enterprise, most especially the major
customers, are interested to know whether their supplier is capable of continuously

supplying their needs for raw materials, spare parts, services, and even technological

information. A customer has a long-range involvement with his supplier's plan and

decisions.

• Government. Governments keep a close watch on the firms which yield good amount of
profits. The state and central Governments are interested in the financial statements to

know the earnings for the purpose of taxation.

• Regulatory Authorities. They ensure that the company's disclosure of accounting

information is in accordance with the rules and regulations set in order to protect the

interests of the stakeholders who rely on such information in forming their decisions.

• Internal users refer to the members of a company's management and other individuals
who use financial information in running and managing the business.

• Owners. The owners provide funds for the operations of a business and they want to
know whether their funds are being used properly or not. They need accounting

information to know the profitability and the financial position of the concern in which they

have invested their funds.