I found this pretty cool video covering definitions for a few important accounting words that everyone should be familiar with. In fact, this might be very basic for some, but it is a good video to revisit accounting basics.
Additionally, the video shows some good examples and shares practice exercises at the end with the viewers. Below are the terms discussed straight from the video:
-Balance sheet: The balance sheet shows the value of everything the company owns (its assets) as well as everything that it owes (its liabilities).
-Asset: An asset is anything owned by a company that can be converted into cash or used to generate income.
Tangible Asset: Assets that have a physical existence, such as cash, equipment, and property.
Intangible Assets: An asset that is not physical in nature, such as a patent.
-Liability: A liability is a financial obligation or debt held by a company. Common Types of liabilities include accounts payable, bank loans, and outstanding taxes.
Short-term liabilities are usually those that must be paid within one year.
Long-term liabilities are repayable after more than a year.
-Profit: The amount of money earned in a given period (usually a year) after deducting all expenses.
Profit Margin: The percentage of income a company retains after all costs are deducted.
-Loss: A negative profit. If a single transaction costs more than it earns, the company is said to make a loss or take a loss. If a company’s profit for an entire year is negative, it is said to make a loss or run at a loss.
-Profit and Loss Statement: One type of accounting report that companies publish on a regular basis.
-Debt: Money owed by a company to another company or individual. Most corporate debt is in the form of loans from banks, or bonds that have been sold to investors.
-Gross: A sum that does not include any deductions.
Gross Income: The total amount of money earned by selling a company’s products can be described as gross income or gross revenue. To gross can also be used as a verb meaning “to earn gross income.”
-Net: A net figure is a sum that includes all deductions. The amount of money earned through a company’s sales, after subtracting all costs, can be described as net income or profit. To net can also be used as a verb meaning “to earn net income.”
-Pretax: The adjective pretax means before payment of tax. Accountants normally show pretax profit or pretax income on one line of a company’s financial statement, and show profit after tax on a separate line.
