Accounting Glossary

Accounts receivable is a current asset on the balance sheet that is used to track money owed to a business by its customers, and is important to manage in order to ensure timely payments and avoid bad debt.

Accrued expenses, recognized but unpaid expenses, are crucial for accurate financial statements and compliance with accounting principles.

Adjusting entries are journal entries made at the end of an accounting period to record any unrecognized income or expenses for the period, ensuring that the financial statements accurately reflect the company�s financial position and are necessary for accurate tax calculations and internal decision making.

Amortization is the systematic allocation of an intangible asset's cost over its useful life or the scheduled reduction of a debt through regular payments.

Amortization of prepaid expenses is an accounting process used to spread the cost of a prepaid expense over the period of time that the company will receive the benefit from the expense, helping to accurately match the cost of the expense to the period in which it will be used and ensuring accurate financial reporting.

Bad debt expense is an accounting term used to describe the amount of money a company has lost due to customers not paying their bills, and is an important factor for enterprise companies to track and manage in order to remain profitable and competitive.

The balance sheet is a financial statement that provides a snapshot of a company's financial position at a given point in time, divided into assets, liabilities, and equity. It is an important tool for accounting professionals, businesses, and investors to assess the company's financial health and performance.

Bank reconciliation is a critical process for accounting professionals at enterprise companies to ensure accuracy and compliance with laws and regulations by comparing internal records of bank account balances to the bank's records.

Capital assets, encompassing long-term investments like property and equipment, are essential for a company's core operations, providing the means for production and growth, and requiring strategic management for optimal value and efficiency.

Capitalization of fixed assets is the process of recognizing significant expenditures as long-term assets rather than immediate expenses, aligning costs with revenue generation, and providing a clear and consistent reflection of a company's financial performance over time.

Cash application is a critical part of the accounts receivable process, ensuring that customers are billed correctly and that payments are applied to the correct invoices, helping to maintain customer relationships and ensure customer satisfaction.

Cash flow is the net amount of cash and cash-equivalents being transferred into and out of a business, and is an important measure of a business's financial health and ability to pay its bills and generate profits.