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description=Plain-English definitions of accounting, bookkeeping, and finance terms every small business owner should know. From accruals to VAT — jargon-free.;

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the (47), business (33), and (28), assets (17), cash (17), #revenue (15), for (14), expenses (13), #accounting (13), your (13), financial (12), goods (12), profit (11), note (10), now (10), liabilities (10), costs (10), tax (9), accounts (9), asset (9), that (9), minus (8), services (8), company (7), current (7), over (7), income (7), cost (7), operating (7), all (6), year (6), when (6), value (6), period (6), total (6), its (6), statement (6), net (6), from (5), term (5), gross (5), balance (5), they (5), equity (5), how (5), flow (5), money (5), businesses (4), terms (4), sales (4), paid (4), used (4), useful (4), life (4), before (4), depreciation (4), one (4), sale (4), records (4), purchase (4), days (4), price (4), you (4), long (4), entry (4), recording (4), glossary (3), reporting (3), has (3), measure (3), liquidity (3), capital (3), which (3), added (3), government (3), fixed (3), generated (3), report (3), showing (3), where (3), profits (3), out (3), loss (3), amount (3), such (3), customer (3), invoice (3), due (3), within (3), payment (3), owes (3), intangible (3), not (3), sold (3), expenditure (3), account (3), bank (3), point (3), with (2), small (2), worldwide (2), service (2), spreadsheets (2), compare (2), contractors (2), resources (2), time (2), bills (2), invoicing (2), solutions (2), payments (2), pricing (2), features (2), product (2), software (2), end (2), fiscal (2), receivable (2), supplier (2), collected (2), produced (2), will (2), received (2), advance (2), have (2), been (2), delivered (2), ledger (2), their (2), verify (2), accuracy (2), expense (2), spreading (2), line (2), financing (2), owns (2), personally (2), sole (2), trader (2), principle (2), recorded (2), kept (2), than (2), owners (2), earnings (2), two (2), reconciliation (2), inventory (2), formal (2), document (2), sent (2), process (2), employee (2), salaries (2), core (2), day (2), running (2), number (2), pay (2), taxes (2), same (2), matching (2), expressed (2), percentage (2), shows (2), much (2), margin (2), debts (2), obligations (2), more (2), converted (2), everything (2), record (2), transaction (2), use (2), physical (2), future (2), transactions (2), free (2), like (2), vehicles (2), property (2), month (2), sheet (2), owner (2), amortization (2), takes (2), system (2), every (2), bookkeeping (2), increases (2), decreases (2), outstanding (2), expected (2), credit (2), changes (2), hands (2), plain (2), english (2), definitions (2), made, 2026, rights, reserved, privacy, policy, affiliates, blog, about, why, switch, wave, freshbooks, quickbooks, xero, content, creators, trades, real, estate, agents, photographers, startups, commerce, retail, consultants, agencies, freelancers, type, templates, calculators, faq, academy, tracking, solopreneurs, planning, insights, manage, track, get, faster, banking, modern, built, growing, annual, are, prepared, submitted, removing, books, because, recoverable, write, off, short, working, purchases, vendor, consumption, most, behalf, vat, change, proportion, volume, variable, estimated, unearned, also, called, turnover, listing, balances, trial, reduces, taxable, deduction, evenly, straight, across, investing, activities, flows, structure, individual, operates, imposed, determining, recognition, any, deductions, cumulative, rather, retained, comparing, sets, ensure, match, divided, quick, ratio, authorizing, order, hand, minor, petty, calculating, distributing, wages, payroll, indirect, cannot, tied, specific, overhead, operations, rent, utilities, opex, means, including, bottom, equivalent, should, helped, generate, arrive, selling, markup, each, keep, internal, reports, regularly, help, make, decisions, management, easily, can, into, without, affecting, others, loans, debited, credited, journal, bill, requesting, held, production, non, patents, trademarks, another, name, arrangement, instalments, while, using, hire, original, market, historical, representing, premium, acquiring, above, goodwill, assumption, continue, foreseeable, going, concern, master, general, truly, available, remain, regardless, produce, sell, machinery, purposes, activity, statements, incurred, request, reimbursed, claim, stake, interest, profitability, ebitda, partner, personal, drawings, affects, least, equally, double, portion, distributed, shareholders, dividend, allocating, tangible, yet, deferred, debit, average, collect, after, dso, reducing, reverse, direct, attributable, producing, cogs, levied, corporation, offsets, related, accumulated, contra, complete, list, chart, projection, inflows, outflows, predict, forecast, movement, only, actually, basis, spending, equipment, capex, quickly, spends, reserves, usually, per, burn, rate, plan, projecting, budget, equals, break, even, spot, errors, snapshot, independent, examination, audit, grouping, invoices, unpaid, aged, receivables, occur, accrual, owed, customers, suppliers, vendors, payable, encounter, explained, simply, try, sign,

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accounting terms glossary plain english definitions note now note now features solutions pricing resources compare sign in try for free accounting glossary accounting terms explained simply plain english definitions of every accounting term you ll encounter as a business owner a b c d e f g h i j k l m n o p q r s t u v w x y z a accounts payable money your business owes to suppliers and vendors accounts receivable money owed to your business by customers accrual accounting recording income and expenses when they occur not when cash changes hands aged receivables a report grouping outstanding invoices by how long they have been unpaid amortization spreading the cost of an intangible asset over its useful life assets everything your business owns that has value audit an independent examination of a company s financial records to verify accuracy b balance sheet a snapshot of your assets liabilities and equity at a point in time bank reconciliation matching your accounting records to your bank statement to spot errors bookkeeping the process of recording all financial transactions of a business break even point the point at which total revenue equals total costs no profit no loss budget a financial plan projecting expected income and expenditure over a period burn rate how quickly a business spends its cash reserves usually per month c capital expenditure capex spending on long term assets like equipment property or vehicles cash basis accounting recording income and expenses only when cash actually changes hands cash flow the movement of money in and out of your business cash flow forecast a projection of future cash inflows and outflows to predict your bank balance chart of accounts a complete list of all accounts used in your accounting system contra account an account that offsets the balance of a related account such as accumulated depreciation corporation tax tax levied on a company s profits by the government cost of goods sold cogs direct costs attributable to producing the goods sold by a company credit an accounting entry that increases liabilities or equity or decreases assets credit note a document reducing the amount a customer owes the reverse of an invoice current assets assets expected to be converted to cash within one year current liabilities debts and obligations due within one year d days sales outstanding dso the average number of days it takes to collect payment after a sale debit an accounting entry that increases assets or decreases liabilities or equity deferred revenue money received in advance for goods or services not yet delivered depreciation allocating the cost of a tangible asset over its useful life dividend a portion of company profits distributed to shareholders double entry bookkeeping a system where every transaction affects at least two accounts equally drawings money a sole trader or partner takes out of the business for personal use e ebitda earnings before interest taxes depreciation and amortization a measure of core profitability equity the owner s stake in the business assets minus liabilities expense claim a request by an employee to be reimbursed for business costs they paid personally expenses the costs incurred in running the business f financial statements formal records of a business s financial activity p l balance sheet and cash flow fiscal year a 12 month accounting period used for financial reporting and tax purposes fixed assets long term physical assets like machinery vehicles and property fixed costs costs that remain the same regardless of how much you produce or sell free cash flow operating cash flow minus capital expenditure the cash truly available to the business g general ledger the master record of all financial transactions of a business going concern the assumption that a business will continue operating for the foreseeable future goodwill an intangible asset representing the premium paid when acquiring a business above its net asset value gross margin gross profit expressed as a percentage of revenue gross profit revenue minus the cost of goods sold before operating expenses h historical cost recording assets at their original purchase price not current market value hire purchase a financing arrangement where you pay for an asset in instalments while using it i income statement another name for the profit loss statement shows revenue expenses and net income intangible assets non physical assets with value such as patents trademarks and software inventory goods held by a business for sale or use in production invoice a bill sent to a customer requesting payment for goods or services j journal entry a record of a financial transaction showing the accounts debited and credited l liabilities everything your business owes to others loans bills and more liquidity how easily an asset can be converted into cash without affecting its price long term liabilities debts and obligations due more than one year from now m management accounts internal financial reports produced regularly to help business owners make decisions margin profit expressed as a percentage of revenue shows how much of each sale you keep markup the amount added to cost price to arrive at the selling price matching principle expenses should be recorded in the same period as the revenue they helped generate n net assets total assets minus total liabilities equivalent to equity net profit revenue minus all expenses including taxes the bottom line net payment terms the number of days a customer has to pay an invoice e g net 30 means due within 30 days o operating expenses opex the day to day costs of running the business such as rent salaries and utilities operating profit gross profit minus operating expenses profit from core business operations overhead indirect business costs that cannot be tied to a specific product or service p payroll the process of calculating and distributing employee wages and salaries petty cash a small amount of cash kept on hand for minor business expenses profit loss statement a financial report showing revenue expenses and profit over a period purchase order po a formal document sent to a supplier authorizing the purchase of goods or services q quick ratio a liquidity measure current assets minus inventory divided by current liabilities r reconciliation comparing two sets of records to ensure they match retained earnings cumulative profits kept in the business rather than paid out to owners revenue the total income generated by your business before any deductions revenue recognition the accounting principle determining when revenue is recorded s sales tax a government imposed tax collected by businesses on the sale of goods and services sole trader a business structure where one individual owns and operates the business personally statement of cash flows a financial statement showing cash generated and used across operating investing and financing activities straight line depreciation spreading an asset s cost evenly over its useful life t tax deduction a business expense that reduces your taxable income trial balance a report listing all ledger accounts and their balances to verify accuracy turnover total revenue generated by a business over a period also called gross revenue or sales u unearned revenue payments received in advance before goods or services have been delivered useful life the estimated period over which a fixed asset will be used by the business v variable costs costs that change in proportion to the volume of goods or services produced vat value added tax a consumption tax added to most goods and services collected by businesses on behalf of the government vendor a supplier or company from which your business purchases goods or services w working capital current assets minus current liabilities a measure of short term liquidity write off removing an asset or receivable from the books because it has no recoverable value y year end the end of a company s fiscal year when annual accounts are prepared and submitted note now modern accounting software built for growing businesses worldwide product features pricing invoicing payments expenses banking reporting solutions invoicing get paid faster track expenses manage bills reporting business insights financial planning sales tax for solopreneurs time tracking resources academy faq calculators templates glossary by business type freelancers contractors agencies consultants retail e commerce startups photographers real estate agents trades contractors content creators compare note now vs xero note now vs quickbooks note now vs freshbooks note now vs wave note now vs spreadsheets why switch from spreadsheets company about blog affiliates privacy policy terms of service 2026 note now all rights reserved made with ️ for small businesses worldwide