Bookkeeping glossary
Plain English meanings for the terms you will see in your books and reports. Across the site, words with a dotted underline show the same meaning when you hover over or tap them.
- Reconciliation
- Checking your books against your bank or card statement, line by line, so every transaction is recorded once and the balances match.
- Accrual
- Recording income when you earn it and expenses when you owe them, rather than when the cash moves.
- Chart of accounts
- The list of categories your business uses to sort every transaction, such as sales, rent or payroll.
- P&L (profit and loss)
- A report showing your income, costs and expenses for a period, and whether you made a profit. Also called an income statement.
- Balance sheet
- A snapshot of what your business owns, what it owes and what is left for the owners on a given date.
- Cash flow
- How money moves in and out of your business. The statement of cash flows shows where cash came from and where it went.
- Restricted funds
- Money a nonprofit receives that a donor or grant says must be used for a specific purpose or time period.
- COGS (cost of goods sold)
- The direct cost of the products you sold, such as materials, stock and the cost of getting it to you.
- Deferred revenue
- Money a customer has paid in advance for something you have not delivered yet. It becomes income as you deliver it.
General information only, not professional advice. Your CPA can explain how a term applies to your business.
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