Basic Bookkeeping Terms Commonly Used

In bookkeeping, there are certain terms that need to be defined because they are exclusive to this field. There are also some phrases and words which are commonly used outside of the field which are also found in it. Common Terms Among the many different words and phrases that are usually utilized by bookkeepers, many are connected to accounting. Let's start with 1. Accounting Period - this phrase actually refers to the period of time in which the data of a particular individual or company is tracked and recorded. For the most part, the usual span of time of this phrase covers a month. Although the government also gets quarterly, semi annual and annual reports as well, these experts prefer to do their reports on a monthly basis since it covers all periods. In bookkeeping, it is the bookkeeper that manages the books. 2. Accounts Receivable - refers to payments, which are still to be received by the business or the store from its customers. It is customary for many stores to accept credit payments from favored customers and these accounts often have payments, which are to follow. It does not necessarily mean that the term refers to credit card purchases made by random customers. 3. Accounts Payable - this term is for the accounts, which the business itself needs to pay. It refers to the outstanding billings that the establishment has yet to pay to vendors, consultants and contractors bill them for products or services that they have provided. 4. Depreciation - it is used to track the use of the company's assets and how it has grown or changed. It usually refers to the reduced value of things, which the company owns such as vehicles, equipment's and others. It is important to keep track of these things because all things need to be replaced or fixed eventually. This keep track of the use of the things and if they are viable investments or not. 5. Interest - this refers to a certain amount of money that the establishment needs to pay if it has borrowed money from a specific source, such as a bank or another company. 6. Inventory - a term that is used to describe and keep track of the products that the store has. It is essential in bookkeeping that a regular inventory of items is done in order to be aware of what is still left and what needs to be bought. This also shows what sells better than others. 7. Payroll - this is the way that an establishment manages the salaries and compensations of its employees and consultants. This is one of the aspects in bookkeeping that needs to be kept in focus by the experts. It includes payments to the government in order to insure employees and to keep track of their government loans. These are just a few of the more commonly used terms in bookkeeping that one may encounter. These will help foster better understanding between the bookkeeper and the establishment owner by helping them understand each other better.