From accounting to forecasting and everything in between, our glossary is designed to help you better understand the terms you’ll come across on your journey to building a strong financial future for your business.
The process of recording, classifying, and summarizing financial transactions to provide information that is useful for decision making.
The money a business owes to vendors for goods or services received but not yet paid for.
The money a business is owed by customers for goods or services provided but not yet paid for.
An accounting method that recognizes revenue and expenses when they are incurred, regardless of when cash is exchanged.
A process gradually reduces the value of a loan or intangible asset over a period of time.
A record of all the changes made to a company's financial records, used to track and verify transactions.
The ability of accounting software to automatically generate and send invoices to customers.
A financial statement that shows a company's assets, liabilities, and equity at a specific point in time.
A feature of cloud accounting software that automatically imports bank transactions into the system.
The process of comparing a company's records of its bank account balance to the bank's records of the same account.
The process of recording financial transactions and maintaining financial records.
A financial plan that outlines a company's expected income and expenses over a specific period of time.
An accounting method that recognizes revenue and expenses when cash is exchanged.
Short-term assets resulting from cash invested by a business with an interest-earning financial institute in securities such as stocks, bonds, treasury bills, commercial paper, or other known securities.
The movement of money in and out of your business each month or over a given period, including cash and cash equivalents.
Cash flow statement
A financial statement that shows the cash inflows and outflows of a company over a specific period of time.
Cash flow insolvency
When a business has adequate assets to pay their debts but does not have the cash at hand to pay them.
Chart of accounts
A list of all the accounts used by a business to classify its financial transactions.
Accounting software that is accessed via the internet rather than being installed on a local computer.
The ability to store and access data on remote servers over the internet.
The process of ensuring that a company's financial practices are in line with legal and regulatory requirements.
Cost of goods sold (COGS)
The direct costs associated with producing or purchasing the goods sold by a company.
The process of copying and storing data.
Measures taken to protect sensitive financial information from unauthorized access or theft.
The systematic reduction in the value of an asset over time.
Plans and processes in place to recover from a disaster or system failure.
Double entry accounting
An accounting system in which every transaction is recorded via a journal entry in at least two accounts, with the debits and credits balancing each other.
The buying and selling of goods and services over the internet.
The abbreviation for end of financial/fiscal year.
The amount of money that an owner and/or shareholders has invested in a business.
The process of recording and categorizing a company's expenses for tracking and analysis.
The process of analyzing a company's financial performance and making recommendations for improvement.
The process of finalizing a company's financial statements and preparing for the next reporting period.
Calculations that compare different aspects of a company's financial performance, such as profitability or liquidity.
Long-term assets, such as property and equipment, that are expected to provide benefits to a business for more than one year.
An estimate of a company's future financial performance, based on historical data and other factors.
A master record of all the financial transactions of a business.
A financial statement that shows a company's revenues, expenses, and net income (or loss) over a specific period of time.
The ability of accounting software to integrate with other business applications, such as inventory management or customer relationship management (CRM) software.
When a business is unable to pay its debts when they become due.
The goods a business holds for sale or use in its production.
A financing option in which a company sells its accounts receivable to a lender at a discount in exchange for immediate cash.
A detailed document listing the company’s financial transactions chronologically by date.
Used to record a business transaction in the accounting records of a business.
How easily an asset can be turned to cash without loosing significant value.
A company's ratio of profit to revenue.
The ability of accounting software to handle transactions in different currencies.
Online payment processing
The ability of accounting software to process electronic payments from customers.
The costs that are incurred in the daily operations of a business.
A service that processes electronic payments from customers on behalf of a merchant.
The process of calculating and distributing employee salaries and wages.
Taxes that employers and employees pay on salaries and wages and remit to the government.
Profit and loss statement
This is the same as income statement.
A report that shows open accounts receivable based on the length of time an invoice has been outstanding.
The process of comparing two sets of records to ensure they are in agreement.
Transaction representing a difference between your general ledger and the source document being compared.
The portion of a company's profits that is retained for reinvestment rather than being distributed as dividends. They are recorded in the shareholder's equity section of the balance sheet at the end of each accounting period.
Return on Investment (ROI)
The measure of what you have gained in relation to what you have paid out.
A tax on the sale of goods or services, typically charged as a percentage of the sale price.
Software as a Service (SaaS)
A cloud-based software delivery model in which a vendor hosts and maintains the software and customers access it over the internet.
A detailed record of transactions for a specific account, such as accounts payable or accounts receivable.
The ability of accounting software to generate tax reports and comply with tax regulations.
A report that lists all the accounts and their balances in a company's general ledger.
The ability of accounting software to limit access to certain features or data based on user roles and permissions.
Value-added tax (VAT)
A tax on the value added at each stage of the production and distribution of a product or service.
The difference between the company's current assets such as cash and accounts receivable and its current liabilities such as accounts payable and current debts.
A reduction in the recorded amount of an asset.