We have provided an accounting / tax term glossary in our site to give our clients a better understanding on accounting, taxing, and bookkeeping. You can search manually through each page for each tax term you require more in depth knowledge on or simply use our search tool to more easily surf through each page. All contents are provided to you by Clint Thomas CPA
( Certified Public Accountant ) located in Delray Beach Florida.
ACCOUNTING / TAX TERM GLOSSARY 
Accounting - is the discipline of measuring, communicating and interpreting financial activity. Accounting is also widely referred to as the "language of business".
Accounting information system (AIS) - is the system of records a business keeps to maintain its accounting system. This includes the purchase, sales, and other financial processes of the business. The purpose of an AIS is to accumulate data and provide decision makers (investors, creditors, and managers) with information to make decision While this was previously a paper-based process, most modern businesses now use accounting software such as UBS, MYOB etc. Information System personnel also needs basic knowledge, if not vast knowledge of database management and programming language such as c, c++, JAVA and SQl as all software are basically built from platform or database. Database after all are where we safe or in accumulate data.
In an Electronic Financial Accounting system, the steps in the accounting cycle are dependent upon the system itself which in turns are developed by programmers. For example, some systems allow direct journal posting to the various ledgers and others do not.
Although information system is naturally available in any areas or expertises, todays enhanced technology makes it more needed than ever. Accounting Information System in this case provide efficient delivery of information needed to perform necessary account work and to assist in delivery of accurate and informative data to users especially those who are not familiar with the accounting and financial reporting areas itself.
This areas however is a new discovered or rather emphasized by academic with further debate on whether information should be manage by those in Information Technologies sector or should it be separated into various areas such as Management Information System and Accounting Information System to name a few.
However, universities worldwide begun to include information system in their syllabus understanding that information system is needed although to perform the most simple task. Some Universities such as the UiTM(Malaysia's largest public universities with 200,000 students) is currently delivering a new course in this area named Accounting Information System to the mass.Accounts payable - is a file or account that contains money that a person or company owes to suppliers, but hasn't paid yet. When you receive an invoice you add it to the file, and then you remove it when you pay. Thus, the A/P is a form of credit that suppliers offer to their purchasers by allowing them to pay for a product or service after it has already been received.
In household, accounts payable are ordinarily bills from the electric company, telephone company, cable television or satellite dish service, newspaper subscription, and other such regular services. Householders usually track and pay on a monthly basis by hand using checks or credit cards. In a business, there is usually a much broader range of services in the A/P file, and accountants or bookkeepers usually use accounting software to track the flow of money into this liability account when they receive invoices and out of it when they make payments.
Commonly, a supplier will ship a product, issue an invoice, and collect payment later, which creates a cash conversion cycle, a period of time during which the supplier has already paid for raw materials but hasn't been paid in return by the final customer. Certain companies, most famously Dell, have been able to profit handsomely by reversing the conversion cycle: they receive payment before they ship the product. Instead of granting credit to their customers, they receive it from them.
An example of a common payment term is Net 30, meaning payment is due in the amount of the invoice 30 days from the date of invoice. Other common payment terms include Net45 & Net60 but could in reality be for any time period agreed upon by the vendor and client.
While booking a receivable is accomplished by a simple accounting transaction the process of maintaining and collecting payments on the accounts receivable subsidiary account balances is and can be a full time proposition. Depending on the industry in practice accounts receivable payments can be received up to 10 - 15 days after the due date has been reached. These types of payment practices are sometimes developed by industry standards, corporate policy, or because of the financial condition of the client.
On a company's balance sheet, accounts receivable is the amount that customers owe to that company. Sometimes called trade receivables, they are classified as current assets. To record a journal entry for a sale on account, one must debit a receivable and credit a revenue account. When the customer pays off their accounts, one debits cash and credits the receivable in the journal entry. The ending balance on the trial balance sheet for accounts receivable is always debit.
Business organizations which have become too large to perform such tasks by hand (or small ones that could but prefer not to do them by hand) will generally use accounting software on a computer to perform this task.
Associated accounting issues include recognizing accounts receivable, valuing accounts receivable, and disposing of accounts receivable.
Accounts receivable departments use the sales ledger.
Other types of accounting transactions include accounts payable, payroll, and trial balance.
Since not all customer debts will be collected, businesses typically record an allowance for bad debts which is subtracted from total accounts receivable. When accounts receivable are not paid, some companies turn them over to third party collection agencies or collection attorneys who will attempt to recover the debt via negotiating payment plans, settlement offers or legal action. Outstanding advances are part of accounts receivables: If a company gets an order from its customers with advance agreed in payment terms. Since no billing is being done to claim the advances several times this area of collectible is not reflected in Accounts Receivables. Ideally, since advance payment is mutually agreed term, it is the responsibility of the accounts department to take out periodically the statement showing advance collectible and should be provided to sales & marketing for collection of advances. The payment of accounts receivable can be protected either by a letter of credit or by Trade Credit Insurance.
Companies can use their accounts receivable as collateral when obtaining a loan (Asset-based lending) or sell them through Factoring (finance). Pools or portfolios of accounts receivable can be sold in the capital markets through a Securitization.
Accrual-basis - accounting records financial events based on events that change your net worth (the amount owed to you minus the amount you owe others). Standard practice is to record and recognize revenues in the period in which they incur and to match them with related expenses in a process known as matching or expense matching. Even though cash is not received or paid in a credit transaction, they are recorded because they are consequential in the future income and cash flow of the company. Accrual-basis is GAAP compliant.