Key Terms Of Accounting

Knowing some basic accounting terms is helpful when deciding where and how to invest money. Whether you are looking at a new or existing business to invest in, planning a loan, thinking of a career or a career change, or just want to handle your own assets and liabilities better, being familiar with accounting terms is most helpful.
There are two categories of accounting. Cash Bases Accounting pertains to the management of personal monetary transactions while Accrued Accounting compares expenses to expenditures and tells the amount that is owed.
Assets are considered as possessions which have good market values and are divided into three main types. Current Assets include cash, checking, savings, stocks, bonds, shares, even money due from clients. Fixed Assets include tangible valuable entities such as property, land, machines, and equipment which can be sold. Intangible Assets include untouchable entities which hold tremendous monetary value such as copyrights, patents, and trademarks.
Accounting is governed by the law of opposites which in essence means where there are Assets, Liabilities are sure to follow. Liabilities are what is owed to creditors, better known as debt.
There are two types of Liabilities. Current Liabilities include bills which you pay monthly, 30-day loans, and compulsory expenses such as taxes, wages, or interest where bills are not recieved but balances must be repaid. Compulsory expenses are also referred to as Accrued Expenses. Long-Term Liabilities are debts owed for longer than a 30-day period, such as mortgages and vehicular loans.
These are only a few of the Key Terms Of Accounting which will help you grasp some of the accounting basics. Financial Capital, Types of Business, and Payrolls will be covered later.