20 Commonly Used Expressions in Accountancy – Global-Learning.ro
string(4) "post"

20 Commonly Used Expressions in Accountancy

Here are 20 commonly used expressions in accountancy along with examples:

  1. Balance the books: To ensure that debits and credits are equal and accurate in a company’s financial records.

Example: The accountant spent several hours balancing the books for the fiscal year.

  1. Cash flow: The movement of money in and out of a business over a specific period.

Example: The company’s cash flow improved after implementing cost-cutting measures.

  1. Profit and loss statement: A financial statement that shows a company’s revenues, expenses, and net income or loss during a specific period.

Example: The profit and loss statement revealed a decline in profitability for the quarter.

  1. Break-even point: The level of sales or revenue at which a company’s total costs equal its total revenue, resulting in neither profit nor loss.

Example: The business needs to increase sales in order to reach the break-even point.

  1. Depreciation: The gradual decrease in the value of an asset over its useful life.

Example: The company applied straight-line depreciation to allocate the cost of the equipment over five years.

  1. Cost of goods sold (COGS): The direct costs associated with producing or acquiring goods that are sold by a company.

Example: The cost of goods sold increased due to higher raw material prices.

  1. Accounts payable: The amount of money owed by a company to its suppliers or vendors for goods or services received but not yet paid for.

Example: The accounts payable department is responsible for managing outstanding invoices.

  1. Accounts receivable: The amount of money owed to a company by its customers for goods or services provided but not yet paid for.

Example: The company’s accounts receivable increased as a result of higher sales.

  1. Liquidity: The ability of a company to meet its short-term financial obligations or convert its assets into cash quickly.

Example: The company’s liquidity position improved after securing a new line of credit.

  1. Return on investment (ROI): A measure of the profitability of an investment, calculated by dividing the net profit or gain from the investment by the initial cost or investment amount.

Example: The marketing campaign generated a high return on investment, resulting in increased sales.

  1. Trial balance: A statement that lists all the accounts in a company’s general ledger along with their debit or credit balances to ensure that total debits equal total credits.

Example: The accountant prepared the trial balance to identify any discrepancies in the company’s accounts.

  1. Fixed assets: Tangible or intangible assets that are not intended for sale in the normal course of business and have a useful life of more than one accounting period.

Example: The company’s fixed assets include buildings, machinery, and patents.

  1. Accrual accounting: An accounting method that recognizes revenue and expenses when they are earned or incurred, regardless of when the corresponding cash is received or paid.

Example: The company follows accrual accounting principles to accurately reflect its financial performance.

  1. Cost accounting: A branch of accounting that focuses on determining and analyzing the costs associated with producing goods or services within a company.

Example: The cost accounting department calculated the manufacturing costs for the new product line.

  1. Capital expenditure (CAPEX): Expenditures made by a company to acquire, upgrade, or improve its fixed assets, usually with a long-term benefit.

Example: The company invested in new manufacturing equipment as a capital expenditure to increase production efficiency.

  1. Internal controls: Procedures and measures implemented by a company to safeguard its assets, ensure accurate financial reporting, and prevent fraud or errors.

Example: The company strengthened its internal controls to mitigate the risk of financial irregularities.

  1. General ledger: A central repository that contains all the accounts and their respective transactions, serving as the foundation for a company’s financial statements.

Example: The accountant updated the general ledger with the latest journal entries.

  1. Cost of sales: The direct costs incurred to produce or acquire goods sold by a company, including raw materials, direct labour, and manufacturing overhead.

Example: The cost of sales increased due to higher material prices and increased production.

  1. Net income: The amount of profit or earnings left after deducting all expenses, including taxes, from total revenues.

Example: The company reported a significant increase in net income for the fiscal year.

  1. Cost of Capital: The cost associated with obtaining financing or capital for a company’s investments or operations.

Example: The company evaluated the cost of capital before making investment decisions.


You can download the lesson from here:

20 Commonly Used Expressions in Accountancy