Accounting Abbreviations Full List From A to Z

The four types of expenditures are investments, net exports, government and consumption. Comparing a bank account to the bank’s records for accuracy and the same information on both records. Present Value is a term that refers to the value of an Asset today, as opposed to a different point in time. It is based on the theory that cash today is more valuable than cash tomorrow, due to the concept of inflation. Payroll is the account that shows payments to employee salaries, wages, bonuses, and deductions.

• In the ever-evolving world of finance and business, you might often find yourself buried under a heap of paperwork full of terms that sound like a foreign language.
• A limited liability corporation (LLC) is a business structure in which members are not responsible for the firm’s debts or liabilities.
• Inventory refers to the assets that a business has purchased to sell to its clients but has yet to sell.

Debt capital covers money obtained through credit instruments such as loans. Seasoned accountants know the abbreviations and lingo of accounting like it’s a second language. But, if you find yourself confused when reading a balance sheet or income statement, it might help to clarify the meanings of common terminology. Keep what is backflush costing reading for a list of 50 accounting abbreviations that will clear up any misunderstandings. The total revenue collected is indicated at the top of the report, and various expenditures (expenses) are deducted until all costs are covered. Abbreviations in accounting are like a second language to experienced accountants.

DAR – Director and Officer Liability Insurance

We’ve compiled this handy list of 42 common accounting terms, along with their common abbreviations (where appropriate) and definitions. A trial balance is a report of the balances of all general ledger accounts at a point in time. Accountants prepare or generate trial balances at the conclusion of a reporting period to ensure all accounts and balances add up properly. In professional practice, trial balances function like test-runs for an official balance sheet. It is essentially a way of adjusting future revenues, expenses, and debts for inflation.

Make sure you know what you’re making – and spending – with these examples of common accounting abbreviations found in an income statement. At a basic level, equity describes the amount of money that would remain if a business sold all its assets and paid off all its debts. Publicly traded companies are collectively owned by the shareholders who hold its stock.

ARR – Adjusted Rate of Return

The idea is to spread capital over various assets so that the performance of any one asset does not determine the overall performance. An increase in a liability or equity account, or a decrease in an asset or cost account, is a credit. This piece of ad content was created by Rasmussen University to support its educational programs. Rasmussen University may not prepare students for all positions featured within this content.

They are created when a company lets a customer purchase their goods or services on credit. Debit refers to a bookkeeping entry that increases the balance of a company’s assets and expenses. Any debit made to a liability, equity, or revenue decreases these accounts.

Labor burden rate

Matos began her career at Ernst & Young, where she audited a diverse set of companies, primarily in consumer products and media and entertainment. She has worked in private industry as an accountant for law firms and for ITOCHU Corporation, an international conglomerate that manages over 20 subsidiaries and affiliates. Matos stays up to date on changes in the accounting industry through educational courses. Accountants track partial payments on debts and liabilities using the term “on credit” (or “on account”).

• Matos began her career at Ernst & Young, where she audited a diverse set of companies, primarily in consumer products and media and entertainment.
• EP (Equity partner) – A person or company that has invested capital in a partnership and is entitled to a share of the profits and losses of the partnership.
• The method contrasts with cash basis accounting, which would record the $2,000 in revenue only after the money is actually received.

Revenue—frequently called sales—is the income earned from business operations and business projects. A general ledger is a record-keeping system that provides a company’s financial data. This account provides a record of each financial transaction during the life of an operating company. COGS refers to the direct expenses related to producing the goods sold by a business. For instance, this may include the cost of materials or parts plus the amount of employee labor used in production. The formula for calculating COGS will depend on what is being manufactured.

Capital/Working Capital

A profit and loss statement, also known as a P & L, is a report that may be generated by your accounting. The P & L reflects your revenues less your expenses to report your net income for a particular time period. Some companies issue P & L reports once a quarter or even once a month. They’re a good way to understand what’s happening with your company. FA (Financial accounting) – The process of recording, classifying, and summarizing a company’s financial transactions to prepare financial statements. Accountants love getting into the details of a company’s assets, equity, and liabilities.

Rules are created and written in an official contract for a company. Some bylaws include how positions within the company are chosen and how the company runs. To obtain CPA licensure, a candidate must meet eligibility criteria and pass a demanding four-part standardized exam. Eligibility standards include at least 150 hours of higher education covering related coursework. Integrity Network members typically work full time in their industry profession and review content for Accounting.com as a side project. All Integrity Network members are paid members of the Red Ventures Education Integrity Network.

Rasmussen University is not regulated by the Texas Workforce Commission. For additional information about Licensing and State Authorization, and State Contact Information for Student Complaints, please see those sections of our catalog. He is totally committed to whatever he is doing whether it is working on a client’s estate plan, business valuations or vacationing with his family. Accounts receivable are outstanding invoices that you have sent to your customers. A related term, Accounts Receivable Aging, replies to a usually-chronological list of your outstanding invoices, starting with those that are the oldest.

People and businesses use the principles of accounting to assess their financial health and performance. Accounting also serves as a useful way for people and companies to honor their tax obligations. In accounting abbreviations, BV represents the original value of an asset after eliminating accumulated depreciation. There you have it, some of the fundamental accounting terms and their definitions. If you are considering whether to pursue an accounting degree, check out our Bachelor of Arts in Accounting program.

IOSCO – International Organization of Securities Commissions

Overhead (O/H) costs describe expenses necessary to sustain business operations that do not directly contribute to a company’s products or services. Examples include rent, marketing and advertising costs, insurance, and administrative costs. Income statements are one of three standard financial statements issued by businesses.

A professional designation that an accountant can gain by passing the CPA exam. Return on Investment (ROI) is a measure used to estimate an investment’s efficiency or compare several different investments’ efficiency. The formula to calculate ROI divides the benefit (or return) of an investment by its cost. CAPEX refers to purchases of assets or an asset improvement with a useful life of more than one year. Capital expenditures may include the purchase of buildings and heavy equipment. FMV refers to the selling price of a product on a market where both buyers and sellers know the asset’s condition and are not under any pressure to buy or sell.