Some Minor Accounting Terms That You May Find Interesting

Unless you are an accountant, you may not know what people are talking about when they mention certain terms. Human nature dictates that we're either embarrassed or ashamed to ask what certain words mean. In the event you have been hearing terms that you are unfamiliar with, let's go over a few commonly used terms.

First things first, the word account has many different meanings. When the term is used in accounting, it is used to refer to different types of accounts that are held within a corporation; like sales accounts, accounts receivable and cash accounts.

An annuity is an investment that gives you the same amount, over time. You will get money from your annuity, once a year, and it is the same amount, each time.

Assets are things which are valuable to you; they can be sold and liquidated. This can also be cash, accounts or anything else that can be sold to get value and money for the owner.

When you have debt, it is referring to the amount of money that you owe to another person, or a lending institution. Many times, when your debt is greater than your worth, you are said to be in an upside down situation.

You'll hear the term depreciation a lot, especially when relating to financial matters. You will hear about investments that have depreciated in value. Anything that loses value over time, no matter how rapidly or how much time in involved, is referred to as depreciating.

A gain is something that you acquire or receive. Typically, this is from the sales of your assets. When you receive compensation from selling these investments or other assets, the money that you receive is considered a gain and will be taxed accordingly by the Internal Revenue Service.

When you lose money on the sale or trade of any asset, you call it a loss. At the end of the year when it comes tax time, your losses will be weighed against your gains. You will only pay taxes on the amount that is equal to your gains less your loses.

One thing that you may hear people talk about is R and D. R and D stands for research and development. You will hear this discussed many times in a business climate. The reason that it is so heavily discussed is because research and development costs affect a company's bottom line.

Standard cost is a fixed cost that something is anticipated to cost in the future. If you are trying to figure what your costs for a particular thing or action will be, you will use a standard cost to figure things out.

These are just a few of the terms that you may hear when people are discussing business and accounting practices. You'll hear these terms on the news, read them in the papers and hear business men everywhere dropping them like they were names of superstars. There are many other terms that will be used and if you're interested, there are many places online to look for their definitions. Simply go to your favorite search engine and run a search on the word.

In the field of accounting, you will use computers and technology to help do your job on a constant basis. Public Cpa You'll need to find mistakes that have been made out of millions of numbers on a computer screen or page. CPA's do so many things with your finances; it's not as broad of a subject as some may think.

Tagged with: Tax Deductions

Filed under: Tax Deductions

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