When it comes to accounting, there are so many different terms that can be overwhelming and confusing for the average person to understand. Unless you are a CPA, you may be unaware of all the accounting jargon out there. In fact, grasping the abundant accounting terms that are used so frequently can be incredibly beneficial in the long run.
The reality is, filing taxes is something everyone must do annually. Therefore, being apprised of the various accounting terms to help make the tax filing process smoother and more understanding can truly make all the difference. Here are some of the key tax filing and other accounting terms you’ll definitely want to know.
Learning these three accounting terms can be a big help during tax season.
Accounts Payable
As a business, it is imperative that business owners understand what accounts payable means. In fact, in terms of broad strokes, accounts payable simply means the money that is owed to suppliers, vendors, or creditors for goods and services provided to a business. As a result, accounts payable can serve as a basic IOU for businesses in general.
Accounting Period
Another commonly used accounting term is ‘accounting period.’ In fact, this commonly used term simply refers to the actual span of time that is set to ensure the requisite and set financial report is released. This timeframe is established so that both businesses as well as investors have the opportunity to analyze the overall business’s performance over a period of time to compare various accounting periods.
Accruals
Accruals refer to the typical record-keeping adjustment that recognizes a business’s adjustments to expenses and revenues. In fact, accruals simply mean that the money is calculated before any money is actually exchanged. Ultimately, accruals will include any expenses and revenues that have yet to be recorded in a company’s account. As a result, accruals refer to a business’ net income, meaning they must always be properly and adequately documented before any financial statements are issued.
Bottom Line
At the end of the day, understanding all the nuances associated with accounting and taxes can help make it easier to file your taxes — especially as a business. In fact, learning the basic accounting jargon can give you a leg up when it comes time to file your business’s taxes effectively and efficiently.
Contact Bowman & Company Today
Bowman & Company CPA, PC provides all of our individual and small business customers with experienced, accurate, and affordable financial services. Our financial services are aimed at decreasing your taxes and increasing your net worth through responsible, timely, and accurate recordkeeping. We offer our services to clients throughout the Washington, D.C. metropolitan area including Maryland and Baltimore County, Columbia, and Howard County. For more information on our offerings, contact us online or call us at (410) 381-8121. You can also find us on Twitter, Linkedin, Facebook, and Youtube.