Accounting,
translated.

Simply: Everything a business owns was financed either by creditors or by its owners.

Simply: Supplier invoices the business has received but has not paid yet.

Simply: Money customers still owe because they received the product or service before paying.

Simply: Record business activity when it really happens—not only when money moves.

Simply: All depreciation recorded on an asset from purchase up to today.

Simply: An estimate of customer bills that probably will not be collected.

Simply: Spreading the cost of a finite-life intangible asset over the years it is used.

Simply: Something useful the business controls, such as cash, a customer receivable or a machine.

Simply: A snapshot of what the business has and how it was financed on one specific date.

Simply: The amount currently shown in the accounts—not necessarily today's selling price.

Simply: The sales level at which the business makes neither a profit nor a loss.

Simply: Money spent on an asset that will help the business for more than one period.

Simply: A report explaining where cash came from and where it went.

Simply: The organized list of account names a business is allowed to use.

Simply: The amount from each sale left to cover fixed costs and then profit.

Simply: The cost of the products that were actually sold during the period.

Simply: The right-hand side of an account. It is a position, not automatically money received.

Simply: A rough comparison of near-term resources with bills due in the near term.

Simply: The left-hand side of an account. It is a position, not a judgment such as good or bad.

Simply: A comparison of creditor financing with owner financing.

Simply: Money received from a customer before the business has delivered what it promised.

Simply: Spreading an asset's cost over the years in which the business uses it.

Simply: What would remain for the owners after all obligations were deducted from the assets.

Simply: A resource consumed to earn revenue or run the business during a period.

Simply: An inventory assumption that treats the oldest purchased units as sold first.

Simply: The main reports that turn accounting records into a picture of the business.

Simply: A cost that stays broadly the same when short-term sales volume changes, such as monthly rent.

Simply: The collection of all accounts where the business sorts its transactions.

Simply: The share of sales left after the direct cost of the goods sold.

Simply: An extra write-down because an asset has lost more value than normal depreciation explains.

Simply: A report showing income, expenses and profit or loss over a period.

Simply: A valuable business resource without a physical form, such as a purchased software licence.

Simply: Goods and materials the business holds to sell or use in production.

Simply: The accounting sentence that shows which accounts change and by how much.

Simply: An amount or obligation the business still owes to somebody else.

Simply: The ability to pay bills on time when they become due.

Simply: Information is material when it is important enough that it could change a reader's decision.

Simply: The amount left after subtracting all expenses from all income for the period.

Simply: Cash generated or used by the normal day-to-day business.

Simply: A cost of running the normal business, such as wages, rent or marketing.

Simply: Money paid now for a benefit the business will receive later, such as future insurance coverage.

Simply: An expected obligation whose exact amount or payment date is still uncertain.

Simply: Past profits kept in the business instead of distributed to owners.

Simply: A ratio asking how much profit the business earned with the assets it used.

Simply: A ratio asking how much profit was earned relative to the owners' invested capital.

Simply: Value earned by selling goods or providing services—not necessarily cash already received.

Simply: A simple drawing of an account: debits on the left, credits on the right.

Simply: A checklist of account balances used to see whether total debits equal total credits.

Simply: A cost that rises or falls with activity, such as material used for each product.

Simply: Money tied up in everyday operations, especially inventory, customer bills and supplier bills.