**Below is a simplified bookkeeping dictionary for clients**
1. Assets: Resources owned by the business, such as cash, inventory, equipment, and accounts receivable.
2. Liabilities: Debts or obligations of the business, like loans, accounts payable, and accrued expenses.
3. Equity: The owner’s interest in the business, calculated as assets minus liabilities.
4. Income/Revenue: Money earned by the business from sales of goods or services.
5. Expenses: Costs incurred to operate the business, including rent, utilities, wages, and supplies.
6. Accounts Receivable: Money owed to the business by customers who have not yet paid.
7. Accounts Payable: Money owed by the business to suppliers or creditors.
8. Balance Sheet: A financial statement showing the business’s assets, liabilities, and equity at a specific point in time.
9. Income Statement (Profit and Loss Statement): A financial statement showing the business’s revenue and expenses over a period, resulting in net profit or loss.
10. Cash Flow Statement: A financial statement showing the inflow and outflow of cash during a specific period.
11. Debit: A record of a transaction that increases an asset or expense account or decreases a liability or equity account.
12. Credit: A record of a transaction that increases a liability or equity account or decreases an asset or expense account.
13. Journal: A chronological record of all business transactions.
14. General Ledger: A master record of all accounts used in the business, showing the changes to each account over time.
15. Trial Balance: A list of all account balances to ensure that total debits equal total credits.
16. Depreciation: Allocating the cost of long-term assets over their useful life to account for wear and tear.
17. Accrual Accounting: Recording transactions when they occur, not when cash is exchanged.
18. Cash Accounting: Recording transactions only when cash is received or paid.
19. Double-Entry Bookkeeping: The method of recording a debit and credit entry for each transaction, ensuring the accounting equation remains balanced.
20. Fiscal Year: The 12-month period used for financial reporting and tax purposes.
