Accounting terms

Last class session on accounting we talked on the Complete Guide to accounting school - i hope by now you should be able to decide on which school should apply for and the best online accounting courses to enrol for.
As an accountant or an accountant to be, you should be familiar with and understanding the terms and vocabularies in accounting, concepts and principles in accounting to how accounting terms or vocabularies are applied to a business. In this class session I will explain everything you need to know about accounting terms and vocabularies.

accounting terms or vocabulary

Accounting Terms Or Vocabulary

When you learn something new like accounting concepts and terms, it helps to create connection between what you know and what you are trying to learn and achieve. In some ways, it is like learning a second language and decoding the new word is part of the learning process. For example, trying to translate the Spanish word necesario you might brainstorm with necessary - and you would be right. How about blanco? Blanco is like blank which is like white. So, blanco is Spanish name for the color white.

Try to make some logical connections about the accounting vocabulary. Take the word - accounting - and think about it. Really, the accounting system is a basic counting of what goes on in a business.

Transactions In Accounting

Let's move on to transactions. Transactions are the business activities, or actions, that build day by day and become your expenses and income. Try to think about the term - transactions. Actions are business activities, and trans means across or thru. These are the basic building blocks of an accounting system. Transactions are to accounting like what raw materials are to a factory production, or petrol is to your car - the transactions are real and how your accounting system handles them impacts a business success and achievements.

It is compulsory as an accountant to keep a record of transactions in a business to know exactly how much money a business spend on production or services and how much money the business earn as a profit. Sounds obvious, right? Do some few research and ask some few bookkeepers{become a bookkeeper} or accountants{become an accountant with these courses how obvious some transactions are. Recording a transaction can be difficult than it looks sometimes if you are not meticulous and clear about what happened in the transaction aspects of the business and how you want it stated or recorded.

For example, if you were an electrician you might buy a roll of electrical wire to run a connection let say, for just a room of about 15feet by 15feet. The roll of electrical wire purchase is one of the business transactions and will have to be recorded as a business expense. During the work process, you then have to involve some other miscellaneous materials such as lamp-holder, switch, socket, even bulbs and might even hire a labor for assistance. Maybe couple days after you are through with the wiring connections and ready to deliver your work to the room owner. Remember that you have to pay for transportation from your workshop to the site, hence, that is another expense. So you hand the room owner a sales slip and then write you a check or pay you in cash and now that the Internet has make everything easy, you might even get a transfer. That, too, is a transaction. It is easy to see the transactions when money is spent as an expense or received as a reward.

The electrical wire and the wiring connection, lamp-holder used and switch with the socket plus the bulb were also part of the transaction. What about the transport fare used to leaving and arrival at the site? Did you have any left over switch or lamp-holder or did you use them all? Maybe there are cut-off wires left but it is not new anymore, is it? If we do not account for all those costs we are missing a piece of the picture and that is the important piece we are missing - like it is the most valuable part of it. Without proper accounting of those transactions, could affect how much money a business has earn at the end of the year - Do you get the idea now?

In all business activities, try to think in terms of transactions because once you can identify what transactions occur in a business, you will be able to organize them into a meaningful manner. So as an accountant of a business or a business owner, you should be able, take a minute or minutes to list what transactions is occurring in the business each day, week and year. Always thinking in terms of transactions might seem miserly{that is, act of hoading money instead of spending it}, but it is important to be cost-conscious and honest with yourself about all the business transactions. The success of business depends on it.

Some transactions are initiated by customers and suppliers. Other transactions can take place inside business or back office of the business. The bookkeeping department creates transactions when they adjust a business books for year-end considerations like machinery depreciation or inventory shrinkage.

What Is Depreciation?

What is depreciation?
Depreciation is the measurement of the decline in value of an asset or assets.
Practical explanation:
Let's say you bought a brand new phone, Samsung Galaxy 6edge+ , and let's say you spend $500 on this new phone. Next year or even in couple months - maybe six months, the phone has some scratch on the screen, wear on the edges, and other faults. You know your phone is not worth $500 anymore. This means your phone has lost value or depreciated.
Now, how is it applied to a business?
When it comes to business owned equipment, you can deduct this lost value as a business expense. Sure, you did not spend cash on the lost value but with depreciation, this is a transaction a business bookkeeper or an accountant will force through at the end of the year. On your taxes, it helps you by increasing your expenses like all other cash transactions. Of course, the other side of depreciation means that the business equiments is not worth as much anymore, that is, it has depreciated.

In order for you as an accountant of a business or a bookkeeper to get a really clear picture of how a business is operating, you need to be diligent and thoughtful about what your real expenses are. Depreciation is a real expense even though it is not a cash transaction.

Learning to see transactions for what they are takes practice and contemplation. Transactions affect so many areas of your business that you must analyze the daily details so you can piece together the bigger picture.

That is all on accounting terms or vocabularies, i believed by now you should know what transactions means in a business. Are you ready to really become an accountant then enrol for any of these courses - Best Online Accounting Courses For Enrollment, for bookkeeping enrollment - Best Online Bookkeeping Programs To Enrol For, see you next class.

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