It’s a well-known fact that people who run businesses are inundated by tasks all day. You might think that it hardly seems feasible to add learning different accounting terms to that pile of responsibilities. However, you must acknowledge the importance of being able to communicate transparently with the employees working for you –
even if that means learning jargon.
But don’t worry! We’ll get you started with some basic accounting terms that will guide you in a conversation with your team.
1) General Ledger
A general ledger (GL) refers to the detailed and complete transcribing of the company’s financial transactions. It also consists of data like your company’s capital, assets, costs, and earnings.
2) Allocation
Allocation is the process of finding and delegating funds to cost objects. A cost object refers to anything you’d like to pay for separate from everything else – this can include products, a department, or a project.
3) Cash flow
This term is used to label the funds going in and out of a business at any point in time. It is a calculation of everything the company has earned and spent on the running of the business and investments made.
4) Present Value
This refers to the present worth of an asset. The concept can be traced back to the idea that an imaginary sum of money you might have in the future doesn’t have the same value as the number of funds you have right now.
5) Generally Accepted
Accounting Principles GAAP is the prescribed set of rules and regulations accounts must follow when accounting for businesses.
6) Return On Investment
It’s the economic measurement of the perceived lucrativeness of a project. It used to only refer to the return a business was making.
7) Accrued Expense
The accrued expense of a company means the single expense that was sustained that hasn’t yet been compensated.
8) Variable Cost
The variable cost refers to expenses that fluctuate depending on how many sales were made. This value will increase or decrease contingent on the business’s production.
9) Balance Sheet
A balance sheet provides a summary of a business’s financial condition. It consists of its liabilities, equities, and assets at a particular period.
10) Equity
This term refers to the number of funds you have left after the removal of all of your liabilities.
11) Book Value
The book value pertains to the original worth of an asset, which does not include the depreciation sum.
12) Cost Of Goods Sold
Cost Of Goods Sold (COGS) is the cost of how much it takes to fund the crafting of a service. This excludes the money spent on the company itself.
13) Gross Margin
It refers to the percentage which stands for how lucrative your business is after subtracting the COGS.
14) Dividends
Finally, dividends talk about the funds the business has to give to shareholders. In most cases, a board of directors decide the amount of percentage to be distributed.
Conclusion
Accounting jargon, like any technical jargon, can be difficult to grasp. But it’s worth it to understand the inner workings of your company on a deeper level. Express Corporate Services, is a highly sought-after accounting firm in Singapore with thousands of satisfied clients, so you can rest easy knowing that we have the rest covered. Talk to us today, and we’ll ensure you get the service your business deserves.