Words Used In Financial Accounting

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As with most specialist fields, accounting has its own vocabulary of terms and phrases that have very particular meanings. Unfortunately, these definitions are often far from intuitive, and they can often seem confusing or even intimidating!

This Mind Tools "Words" page is designed to help you navigate your way through the minefield of financial accounting 'speak': It provides a quick reference glossary of words and phrases commonly used in the accounting departments of organizations.

This "Words" page covers the following terms:

Balance Sheet Items

• Accounts Payable
• Accounts Receivable
• Amortization
• Asset
• Balance Sheet
• Book Value
• Creditor
• Current Asset
• Current Liability
• Debtor
• Depreciation
• Equity
• FIFO
• Fixed Asset
• Goodwill
• Liabilities
• LIFO
• Liquid Assets
• Reserves/Reserve Account
• Retained Earnings

Income Statement Items

• Accrual
• Cost of Goods Sold
• EBIT
• EBITDA
• Expense
• Fixed Cost
• Gross Profit
• Income Statement
• Net Income
• Profit and Loss Account – see Income Statement
• Revenue
• Statement of Cash Flows
• Variable Cost

Terms are defined below:

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