Terms used in Accounting

The following can help you understand some basic accounting terms:

1. Entity: A well-defined economic unit called an "accounting entity" that separates the accounting of specific transactions from other divisions or accounting entities. From the standpoint of accounting, an organizational structure with distinct goals, procedures, and records might be considered an accounting entity, eg: company.

2. Transactions: A transaction is a business operation that affects an organization's financial operations on a financial basis. When purchasing a product, making a sale, or incurring any type of expense, money will be transferred, and this transaction will have an impact on the accounting records.

3. CapitalThe financial resources that financiers put in businesses with the intention of using them to finance operations can be simply defined as capital. It can be used to pay for ongoing expenses as well as to finance upcoming growth.

4. Stock: The term "stock" is frequently used to refer to the quantity of easily available goods that are kept in a store or warehouse and are prepared for purchase or delivery.

5. Goods: Goods are made, materialized commodities that are in constant demand on the market.

6. Creditors : The term "creditors" or "receivables" refers to a person or business that owes money under a credit arrangement. Through a loan arrangement or contract, the creditor typically offers the opposing party credit to take up money.

7. Debtors: The people or organizations who owe money to their suppliers are known as debtors or payables. The person who borrows money from a creditor is said to be a debtor.

8. Liabilities: The company's debt is referred to as liabilities. The bank loans, unpaid debts, mortgages, and any other financial obligations the business has. Current liabilities and non-current liabilities are the two types of liabilities. Short-term liabilities include current liabilities. This group includes overdue bills, payroll taxes, accrued expenses, loans, advances, etc. Long-term obligations, such as long-term loans, long-term leases, deferred tax liabilities, and other items, are included in the non-current liabilities.

9. Assets: Assets are any resources that a company or organization has access to in terms of financial accounting. Anything that has the potential to produce good economic value and is used over the long term qualifies. The asset may fall within the categories of Fixed asset or Current asset. The category of fixed assets includes items like furniture, automobiles, land, machinery, buildings, and other equipment. Current Assets are important in business since they relate to an organization's ability to pay its short-term liabilities and short-term liquidity. Additionally, it is easily modifiable. Cash, accounts receivable, stock inventory, prepaid obligations, cash equivalents, and many more items are examples of current assets.

10. Revenue/Income: Revenue or income is the total amount of money made by selling goods or rendering services related to an organization's core business operations. It is, in essence, an organization's whole revenue or profit. In accounting, the income is displayed on the income statement's top line.

11. Expenses: Expenses are the operational costs incurred to generate income for a business from an accounting standpoint. The expense account will be charged for the costs.

12. Profit: The term "profit" refers to a financial gain, more particularly, the difference between the gain and the cost of purchasing, operating, or creating a good or service.

13. Loss: Loss is the term used to describe the financial costs incurred by a business while generating revenue. Profit and loss are shown by the difference between revenue and outgoing costs.

14. EquityEquity is the amount of money a business owner invests in or owns. The actual amount of firm equity is shown by the balance sheet's difference between assets and liabilities.

15. Bookkeeping: The act of maintaining financial records for a business is referred to as bookkeeping. At the conclusion of the fiscal year, it establishes precise and organized financial reports.

16. Stakeholders: Stakeholders are the people or organizations who consistently have an interest in or concern for the entity. Employees of an organization can be thought of as stakeholders with a stake in its expansion.

17. Shareholders: Owners of an organization's shares are known as shareholders. A stakeholder may or may not be a shareholder, while a shareholder is always a stakeholder.

18. Sales: The exchange of goods and services for cash is referred to as sales.

19. Purchase: The act of purchasing products or assets is a form of business. Purchases can be made using cash or credit.

20. Ledger: The account or record used to maintain bookkeeping entries or transaction entries for balance sheet and income statement transactions is known as the accounting ledger.

21. Journal: The account that records every aspect of a business's financial dealings is called a journal. It can be used to transfer information to other accounting records and for future account reconciliation. Odoo17 uses five different sorts of journals: sales, buy, cash, bank, and others.

22. Journal Entries: A journal entry is a group of accounting records for a business's transactions. It also includes the ledgers that have an impact on the credit and debit sides of the transaction, together with the reference number, accounting date, and journal entries related to the transaction.

The Odoo17 Accounting module evolved into a more reliable and cozy tool for managing the financial management parts of the business by pursuing new and improved capabilities.

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