Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money,

transactions and events which are, in part at least, of financial character, and interpreting the results thereof'
(AICPA)

Accounts Payable these are the liabilities in a business of the organization that shows the money owed to others.
For example, money spent on pending bills and taxes.

Accounts Receivable. This is an asset that represents the money owed by the other to the business and the
organization. For example, money the debtors owe the organization or credit sales made by the organization.

Accounting Method - A process used by a business to report income and expenses. Companies must choose
between two methods acceptable to the PFRS, cash accounting or accrual accounting.

Accounts Receivable - Money which is owed to a company by a customer for products and services provided
on credit. This is often treated as a current asset on a balance sheet. A specific sale is generally only treated
as an account receivable after the customer is sent an invoice.

Accounts Payable - Money which a company owes to vendors for products and services purchased on credit.
This item appears on the company's balance sheet as a current liability, since the expectation is that the liability
will be fulfilled in less than a year. When accounts payable are paid off, it represents a negative cash flow for
the company.

Accrual Basis. This is an accounting method that performs many functions like recognizing the revenue when
earned, rather than when collected, and expensed that incurred rather than when they are paid. In other words,
Accrual basis records all the financial transfers when they occur, i.e. in the period in which they occur rather.

Appreciation the increase in the value of a company’s assets. Appreciation can be the result of an increase in
demand for a product or service.

Asset - Any item of economic value owned by an individual or corporation, especially that which could be
converted to cash. Examples are cash, securities, accounts receivable, inventory, office equipment, real estate,
a car, and other property.

Audit is a formal examination and evaluation of an organization’s records to ensure quality assurance, check
internal control, elimination of fraud, and to check the effectiveness of the policies.

Auditor a person whose job is to evaluate accounting records in order to make sure they have been done
properly and to check if the company is being run efficiently.
Balance Sheet - A quantitative summary of a company's financial condition at a specific point in time, including
assets, liabilities and net worth. The first part of a balance sheet shows all the productive assets a company
owns, and the second part shows all the financing methods (such as liabilities and shareholders' equity).
Bookkeeper a person whose job is to record daily transactions, issue invoices and complete payrolls.
Bookkeepers are usually supervised by accountants. Bookkeepers are required to have less experience than
accountants and don’t need a degree in accounting.
Budget is the total requirement of assets in the whole coming year.

Credit. It represents the reduction of an asset or in other words, the expenditure made or added to a liability. Its
entry is done on the right side of the balance sheet.

Calendar Year. A period of 12 consecutive months starting January and ends in December within the same year.

Cash Basis Accounting - An accepted form of accounting that records all revenues and expenditures at the
time when payments are actually received or sent. This straightforward method of accounting is appropriate
for small or newer businesses that conduct business on a cash basis or that don't carry inventories.

Cash Flow Statement - A summary of the actual or anticipated incomings and outgoings of cash in a firm over
an accounting period (month, quarter, year). It answers the questions: Where the money came (will come)
from? Where it went (will go)?

Cost the amount of expenditure incurred on or attributable to a specified article, product or activity.

Debit. It represents the gain in the asset or the earnings made. The entry of debt is done on the left side of a double
entry accounting system.

Depreciation the decrease in the value of products or services a company offers. Depreciation can be due to a
high supply of similar products or services offered by competitors
Double-entry accounting records financial transactions in which each transaction is entered in two or more
accounts. Furthermore, it involves two-way, self-balancing posting. Total debits must equal total credits. Which
means for every entry there is an equal and opposing effect.

Expense is funds paid by the organization or business. For example, paychecks to employees, reimbursements to
employees, payments to vendors for goods or services.

Expense - Any cost of doing business resulting from revenue-generating activities.

Financial statements are a series of reports showing a summary view of the various financial activities of
the business at a specific point in time. Also, each statement tells a different story about financial activity taking
place in the organization. The three main aspects of financial statements are Profit and Loss , Balance sheet, and
Cash flow Statement.
Fiscal year is a period of 12 consecutive months chosen by an organization as its accounting period which may
or may not be a calendar year.

Fixed asset is any real item with a useful life of more than one year and, i.e. it does not have liquidity. For example,
the building of a company and the equipment required.

Fund balance represents the net assets of the company. To arrive at this number take total assets minus total
liabilities. Also, Any excess revenue over expenses or cumulative appreciation or depreciation on investments
will become a net asset at the end of the fiscal year.

GAAP is an abbreviation for Generally accepted accounting principles which includes conventions, rules. In
addition, the procedures that are necessary to define accepted accounting practice at a particular time. Besides
that, The highest levels of such principles are set by FASB.

General ledger is the collection of all assets, liability, fund balance (net assets), revenue and expense accounts.

Income statement is a summary report that shows revenues and expenses over a specific period of time, such as
a month, quarter or fiscal year.

Income Statement - An accounting of sales, expenses, and net profit for a given period. An income statement
depicts what happened over a month, quarter, or year. It is based on a fundamental accounting equation
(Income = Revenue - Expenses) and shows the rate at which the owners’ equity is changing for better or worse.

Investment: Expenditure on assets held to earn interest, income, profit or other benefits.

Journal entry is a group of debit and credit transactions that are included in the general ledger. Consequently, All
entries in the journal must result in zero so debits must be equal to credits.

Liability is what the business organization owes to others. For example-loans, taxes, long-term debt from a bond
issue, funds held by the college for a third party such as a student group.

Liability - An obligation that legally binds a company to settle a debt. When one is liable for a debt, they are
responsible for paying the debt. A liability is recorded on the balance sheet and can include accounts payable,
taxes, wages, accrued expenses, and deferred revenues. Current liabilities are debts payable within one year,
while long-term liabilities are debts payable over a longer period

Net Income (loss) is the amount a department lost for a specific period of time. The arrival at this number takes
total revenues minus total expenses.

Restricted fund is a fund established to account for assets whose income must be used for purposes established
by donors or grantors.
Return on Investment (ROI) the profitability ratio of a certain investment. The return on investment is calculated
as the benefit gained from the investment divided by the cost of the investment

Revenue - The total amount of money received by the company for goods sold or services provided during a
certain time period. It also includes all net sales, exchange of assets; interest and any other increase in owner's
equity and is calculated before any expenses are subtracted.

Share a unit of ownership in a company. The person or organization who owns shares (the shareholder, see
below) is entitled to dividends (usually cash), but they also share the responsibility if there are losses.
Shareholder a person or organization (company or any other institution) that owns shares in a company.
Shareholders are, in a way, the owners of a company. If the company is doing well, the value of the shares
goes up. If, on the contrary, the company is not profitable, the value of its shares decreases

Shareholders' Equity - An ownership interest in a corporation in the form of common stock or preferred stock.
It is calculated by taking the total assets minus total liabilities; here also called shareholder's equity or net
worth or book value.

Subsidiary ledger is a group of accounts containing the detail of debit and credit entries. For instance, detailed
information contained in Accounts Payable.

Unrestricted fund is an accounting terminology term that is a fund having no restrictions as to use or purpose.