May 15, 2019

Top 10 Accounting Terms You Should Know

Naveen Shayan

LedgerMax specialist

Whether you have hired a professional to look after your bookkeeping chores or you're doing it yourself; there are some basic accounting terminologies you need to be familiar with. Let's have a look at them:

1. General Ledger:

It can be defined as the comprehensive record of the financial transactions of an organization, counting its equity, revenue, assets, expenses and liabilities.

2. Equity:

It is defined as the total money invested by the business owners or shareholders in the business subtracting any monies drawn out from the business.

3. Revenue:

The revenue of a business is the totality of the money generated by means of sales of services or goods, interests, company shares, properties, royalties, etc. prior to the deduction of expenses.

4. Assets:

This can be defined as anything owned by the business which has a monetary worth. For instance, a business's tangible assets usually comprise of equipment, buildings, lands, accounts receivable, automobiles, cash etc. Moreover, intangible business assets consist of franchise contracts, client lists, lease arrangements, financial contracts, trademarks, copyrights, patents, and brand names etc. Assets are expressed in terms of their cash value on balance sheets.

5. Expenses:

These are defined as expenditures that a business incurs to generate revenues. There are two types of expenses; variable and fixed. Variable expenses vary on the basis of production or sales cycle while fixed expenses are defined costs that include salaries and rents etc.

6. Liability:

Liability is a financial compulsion owed by the organization or business, that includes rents, income taxes, salaries, payments payable to suppliers, utilities, interest payments, etc. A liability can either be long or short term and is classified on balance sheets as per their categorization.

7. Fiscal Year:

This is a twelve month period constituting the beginning and conclusion of the yearly financial accounts for a business. A fiscal year does not essentially match to the usual calendar year.

8. Working Capital:

The accessible money that a business has for reinvestment or payment of bills is known as working capital. The working capital is equivalent to the worth of all existing assets (subtracting the liabilities) and is well-thought-out as a significant measure of a business health.

9. Balance Sheet:

This is a portrayal of the financial status of any business at a specific time period. It is classified into two major sections; where in the first section you can find assets while in the other, there are shareholders equity and liabilities.

10. Income Statement:

This is a kind of declaration to show your profits, expenses, and revenues for a specific point in time. An income statement actually depicts whether your business is being profitable at that particular time period or not.

LEDGERMAX BLOG

Our Featured Blog Posts

July 1, 2025
For small and medium enterprises (SMEs) in Pakistan, managing day-to-day business expenses is both an operational necessity and a financial challenge. In a developing economy where access to credit can be limited and cash transactions dominate many sectors, knowing when to use cash and when to rely on credit can be the key to long-term financial health. This article explores the pros
Read more
May 6, 2025
In the digital age, social media is no longer just a platform for entertainment and socializing; it has become a powerful business tool, especially in countries like Pakistan where over 70 million people use the internet and mobile phones are in almost every hand. For small businesses, social media offers a cost-effective, direct way to connect with customers, build brand awareness, and drive sales. Whether you’re running a clothing boutique in Lahore, a food  
Read more
April 8, 2025
For those running a business in Pakistan, managing taxes effectively is critical to maintaining compliance and achieving sustainable growth. Two of the most significant taxes that business owners must understand are Sales Tax and Income Tax. While they may sound similar, these taxes apply to different parts of your business operations and are governed by separate regulations. Whether you run a small retail shop, an online store, or a service-based business,
Read more