Accounting Registers and their Meaning are listed and discussed herein. This is to acquaint you with Accounting terms.
Accounting registers and their meaning in Nigeria
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No matter the line of business you belong in, there will always be a need for accounting, and depending on the size of your business, you may need the service of an accountant.
It will help if you are already acquainted with some of the terms that your accountant might want to use so that when they are used, you are not confused.
Every profession has its own registers and in other to blend in with people of that profession, you need to understand the registers for each of the different professions.
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Below are some of the Commons Accounting Registers or terms you will hear from someone whose job is to talk about the total of money; accountants:
Revenue: Any money that is earned by your business either through profits or grants.
Liquidity: This is how quickly a company’s asset can be transformed into cash.
Balance Sheet: this is a book or sheet that tells all of the company’s worth by bringing together the assets and liabilities in order to know the equity of the company
Book Value: Every time your asset gets used, it loses its value. This book value then means the original value of an asset before the genesis of depreciation.
Inventory: It is a word used to classify all the assets that a business or company has bought in order to resell or use in the production of its products but had not yet been used.
As they as sold or used, the inventory records reduce gradually. With a good inventory, a businessman will know when to make fresh purchases.
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Asset: Anything the company or business possesses that has a value of money. It includes the company’s landed property, building, structure, equipment, etc.
Depreciation: Some assets when are used to lose their value. The process of an asset losing its value over a period of time is often referred to as depreciation in accounting.
Account Payable: this has to do with all the accumulated or incurred expenses of a business that has not yet been paid. In the balance sheet, the accounts payable is always on the liability section to display the debt incurred by the company or business.
Account Receivable: This has to do with all the possible income that the company is expecting as a result of the services that it has rendered to people in the business.
It is often recorded as an asset on the Balance sheet as it will be converted to cash for the company in the shortest period of time.
Accrued Expense: These are services or goods that a company has bought or used but has not yet paid for. A good example of this is the workers’ salary.
Liability: This includes all the debts that the company must pay. In this case, the company is indebted to a person or a group of people.
Expenses: These are costs made by the company either through purchases or pay for services. Anything that takes money from a business is an expense.
Allocation: This is a system of designating resources, either in kind or cash for a project or purpose. When the fund is allocated for a particular thing in a company, it is often used judiciously for that sole purpose.
Cash Flow: This has to do with how money comes in and out of a business.
Payroll: Every business hires labor and everything about their financial satisfaction in the company reflects in the companies payroll.
Overhead Cost: this has to do with the necessary expense a company needs to make for the smooth running of the business but not the day-to-day expenses though. Overhead costs include Executive salaries, Rent, etc.
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Present Value: This refers to the cost of an asset at the present day, not yesterday or tomorrow but today.
Fixed Cost: This is the worth of a good or service within the company. Whether there are more sales or less, a fixed cost does not change.
Variable Cost: This is the direct opposite of fixed costs as they change based on certain circumstances like company policies and market trends.