Bookkeeping glossary
The terms your reports assume you already know.
35 sourced definitions, each with a real example, a failure mode, and links to the concepts around it.
Foundations
BookkeepingBookkeeping is the process of recording, organizing, and reconciling a business's financial activity.AccountingAccounting interprets, reports, and applies financial information produced from the underlying records.General ledgerThe general ledger is the detailed record of activity and balances for every account in the books.Chart of accountsA chart of accounts is the organized list of accounts a business uses to classify transactions.Trial balanceA trial balance lists each general-ledger account and its ending debit or credit balance.
Methods
Cash basis accountingCash basis accounting generally records income when received and expenses when paid.Accrual basis accountingAccrual basis accounting generally records income when earned and expenses when incurred.Single-entry bookkeepingSingle-entry bookkeeping records activity in a simple running register without a complete debit-and-credit system.Double-entry bookkeepingDouble-entry bookkeeping records every transaction with equal debits and credits across at least two accounts.
Reconciliation
Bank feedA bank feed imports transaction data from a financial institution into accounting software.Bank reconciliationBank reconciliation explains the difference between the book balance and an external bank statement for the same date.Reconciliation differenceA reconciliation difference is the unexplained amount remaining after comparing a ledger balance with its independent statement or schedule.Duplicate transactionA duplicate transaction is the same economic event recorded more than once.
Financial statements
Income statementAn income statement reports revenue, expenses, and profit or loss over a period.Cash flow statementA cash flow statement explains changes in cash from operating, investing, and financing activities.Balance sheetA balance sheet reports assets, liabilities, and equity at a specific date.Gross profitGross profit is revenue minus the direct cost of producing the goods or services sold.Net profitNet profit is the amount remaining after recognized expenses are subtracted from revenue for a period.
Accounts
Accounts payableAccounts payable is money a business owes vendors for goods or services already received.Accounts receivableAccounts receivable is money customers owe a business for goods or services already delivered.RevenueRevenue is income earned from a business's ordinary activities before subtracting expenses.Cash receivedCash received is money deposited or otherwise collected, regardless of whether it is current-period revenue.ExpenseAn expense is a cost recognized in earning revenue or operating the business during a period.AssetAn asset is a resource controlled by the business that is expected to provide future economic benefit.
Services
BookkeeperA bookkeeper maintains the transaction records and recurring close process for a business.CPAA certified public accountant is a state-licensed accounting professional who may provide tax, assurance, and advisory services.Tax preparationTax preparation is the work of converting financial and tax records into required tax returns and filings.Cleanup bookkeepingCleanup bookkeeping corrects inaccurate, duplicated, misclassified, or unsupported records in existing books.Catch-up bookkeepingCatch-up bookkeeping records and closes periods that were never completed.Monthly bookkeepingMonthly bookkeeping completes the records and close controls for each calendar or fiscal month.Quarterly bookkeepingQuarterly bookkeeping completes or reviews records once every three months instead of every month.Outsourced bookkeepingOutsourced bookkeeping uses an external provider to perform some or all recurring bookkeeping work.In-house bookkeeperAn in-house bookkeeper is an employee whose primary role includes maintaining the company's books.Automated bookkeepingAutomated bookkeeping uses rules or software to import, match, or propose accounting entries.Reviewed bookkeepingReviewed bookkeeping adds a documented quality-control step before records and reports are delivered.