By Accountingpedia Staff 
Accounting can feel like learning a secret code, with terms that sound like they belong in a finance textbook.
But don’t sweat it—this guide breaks down 67 key accounting terms in a friendly, straightforward way.
Whether you’re running a small business, studying for an exam, or just curious about money matters, this list will help you make sense of balance sheets, profit reports, and more.
Let’s jump in and demystify the world of numbers!
1. Accounts Payable (AP)
The money a business owes to suppliers for stuff bought on credit, like supplies or services. Think of it as a stack of bills waiting to be paid.
2. Accounts Receivable (AR)
Cash a business is waiting to collect from customers who bought something on credit. It’s the IOUs the company is expecting to cash in.
3. Accrual Accounting
A way of tracking money where income and expenses are recorded when they happen, not when the cash moves. It’s like keeping score of the game as it unfolds, not waiting for the final whistle.
4. Amortization
Spreading out the cost of a loan or an intangible asset, like a patent, over time. Think of it like paying off a car loan in small, steady chunks.
5. Assets
All the stuff a business owns that’s worth something—cash, inventory, buildings, you name it. These are the tools that keep the business running.
6. Balance Sheet (BS)
A quick snapshot of what a company owns (assets), owes (liabilities), and what’s left for owners (equity) at a specific moment. It’s like a financial selfie.
7. Bookkeeping
The daily grind of recording every money move a business makes. It’s the organized chaos that accounting builds on.
8. Break-Even Point (BEP)
The magic spot where a business’s income matches its costs—no profit, no loss. It’s the starting line for making real money.
9. Capital (CAP)
The cash or resources a business uses to grow or keep the lights on, like equipment or startup funds.
10. Cash Flow (CF)
The flow of money in and out of a business. Good cash flow means more cash is coming in than going out—like a healthy financial heartbeat.
11. Cash Flow Statement (CFS)
A report that tracks how cash moves through a business, split into operations, investments, and financing. It’s the story of where the money goes.
12. Chart of Accounts (COA)
A master list of every account a business uses to track its money, like a roadmap for all financial transactions.
13. Cost of Goods Sold (COGS)
The direct costs of making the products or services a business sells, like materials or worker wages. It’s what it costs to get the goods out the door.
14. Credit (CR)
A bookkeeping entry that boosts liabilities or equity or lowers assets. It’s one side of the accounting coin.
15. Current Assets (CA)
Things a business can turn into cash within a year, like inventory or money owed by customers. These are the quick-to-liquidate items.
16. Current Liabilities (CL)
Bills or debts due within a year, like supplier invoices or short-term loans. These are the payments knocking at the door.
17. Debit (DR)
A bookkeeping entry that increases assets or cuts liabilities or equity. It’s the flip side of a credit.
18. Depreciation
The slow drop in value of physical stuff, like machinery or vehicles, as they wear out over time. It’s like accounting for aging equipment.
19. Double-Entry Bookkeeping
A system where every transaction hits two accounts—one debit, one credit—to keep things balanced. It’s the golden rule of accounting.
20. Equity
What’s left for the business owners after all debts are paid. It’s the slice of the pie they get to keep.
21. Expense (EXP)
The money spent to keep a business running, like rent, utilities, or employee salaries. These are the costs of staying in the game.
22. Financial Statements
Reports like the balance sheet, income statement, and cash flow statement that sum up how a business is doing financially.
23. Fiscal Year (FY)
A 12-month period a business uses for accounting, which might not line up with the calendar year. It’s their chosen financial timeline.
24. Fixed Assets (FA)
Big-ticket items like buildings or equipment that a business uses for years. These aren’t going anywhere soon.
25. Fixed Costs (FC)
Expenses that stay the same no matter how much a business produces, like rent or full-time staff salaries.
26. General Ledger (GL)
The big book (or digital file) that holds all of a business’s financial transactions, sorted by account. It’s the heart of accounting.
27. Gross Margin (GM)
The percentage of revenue left after subtracting COGS. It shows how much cash is left to cover other expenses.
28. Gross Profit (GP)
Revenue minus COGS. It’s the money made before paying for things like rent or marketing.
29. Income Statement (IS)
A report showing how much money a business made and spent over a period, ending with profit or loss. It’s also called a P&L.
30. Intangible Assets
Valuable things a business owns that you can’t touch, like patents, brand names, or goodwill.
31. Inventory
The goods a business has in stock, ready to sell or use, like raw materials or finished products.
32. Journal Entry (JE)
A note in the books recording a transaction, showing which accounts get debited or credited.
33. Ledger
A collection of all financial transactions, organized by account, built from journal entries.
34. Liabilities
Debts a business owes, like loans or unpaid supplier bills. It’s the money someone else is waiting for.
35. Liquidity
How fast a business can turn assets into cash to pay bills. More liquidity means more wiggle room.
36. Net Income (NI)
The profit left after subtracting all expenses, taxes, and costs from revenue. It’s the money that really counts.
37. Net Profit Margin (NPM)
Net income divided by revenue, shown as a percentage. It tells you how much of every dollar earned is actual profit.
38. Operating Expenses (OPEX)
The costs of running a business that aren’t tied to making products, like advertising or office supplies.
39. Operating Income (OI)
Profit from the core business before interest and taxes. It shows how well the main operations are performing.
40. Overhead
Costs not directly linked to making products, like utilities or rent. It’s the background hum of business expenses.
41. Owner’s Equity (OE)
The value of the business that belongs to the owner after debts are cleared. It’s their stake in the company.
42. Payables
Another way to say accounts payable—the money a business owes suppliers.
43. Profit
The cash left after all expenses are paid. It’s the reward for all the hard work.
44. Profit and Loss Statement (P&L)
Another name for the income statement, showing revenue, expenses, and whether the business made or lost money.
45. Quick Ratio (QR)
A way to measure liquidity: (current assets minus inventory) divided by current liabilities. It shows how easily a business can pay short-term bills.
46. Receivables
Short for accounts receivable—the money customers owe the business.
47. Retained Earnings (RE)
Profits a business keeps instead of paying out to owners or shareholders. It’s like saving for a rainy day.
48. Return on Assets (ROA)
A measure of how well a business uses its assets to make money, calculated as net income divided by total assets.
49. Return on Equity (ROE)
Shows how much profit a business makes for each dollar of owner’s equity. It’s net income divided by equity.
50. Revenue (REV)
The money a business earns from selling goods or services. It’s the starting point for profit calculations.
51. Shareholders’ Equity (SE)
The value left for shareholders after liabilities are paid. It’s like owner’s equity but for corporations.
52. Solvency
A business’s ability to pay off long-term debts. It’s about staying financially healthy for the long run.
53. Statement of Cash Flows
Another name for the cash flow statement, showing how cash moves in and out over time.
54. Tangible Assets
Physical things a business owns, like equipment or inventory, that you can actually touch.
55. Trial Balance (TB)
A list of all account balances to check that debits equal credits. It’s like a quick health check for the books.
56. Variable Costs (VC)
Expenses that change depending on how much a business produces, like raw materials or shipping.
57. Working Capital (WC)
Current assets minus current liabilities. It’s the cash a business has to keep things running smoothly.
58. Accrued Expenses
Costs a business has racked up but hasn’t paid yet, like wages or utility bills due later.
59. Allowance for Doubtful Accounts (ADA)
Money set aside for customer payments that might never come. It’s a safety net for bad debts.
60. Bad Debt
Money customers owe that’s probably not getting paid, so it’s written off as a loss.
61. Capital Expenditure (CAPEX)
Cash spent on big, long-term stuff like equipment or property. It’s an investment in the business’s future.
62. Cash Basis Accounting
A simpler method where money is recorded only when it’s actually paid or received.
63. Cost Accounting
Digging into costs to figure out how to make a business more efficient and profitable.
64. Dividend
Cash or stock paid to shareholders from a company’s profits as a little thank-you.
65. Earnings Before Interest and Taxes (EBIT)
Profit from the core business before dealing with interest or taxes. It’s a look at operational success.
66. Generally Accepted Accounting Principles (GAAP)
The standard rules for financial reporting in the U.S., keeping things clear and consistent.
67. Taxable Income
The income a business has to pay taxes on after deductions. It’s what the tax folks care about.
Let’s Wrap It Up
There you go—67 accounting terms unpacked in a way that’s easy to follow. From assets to taxable income, these terms are the building blocks of understanding a business’s financial story.
Keep this list nearby, and the world of accounting will feel a lot less like a puzzle. Whether you’re balancing books or just curious, you’re now armed with the lingo to talk money like a pro!