Accounting terms dictionary, part 1: letters A to G

This dictionary gathers, in alphabetical order, the accounting, inventory, purchasing, sales, treasury and tax terms most used by a business that buys and sells goods. This part covers the letters A to G.

Each entry explains the term in one or two lines. The complete dictionary is split into three parts by letter blocks: part 1 goes from A to G, part 2 from H to M and part 3 from N to Z. Use the letter table below to find what you need quickly.

Letter index for this part:

Letra	Entradas
A	21
B	18
C	44
D	13
E	11
F	13
G	6

A

abnormal shrinkage: Loss of inventory caused by extraordinary events or control failures, which must be identified and treated separately.
account: Basic unit of record that groups the increases and decreases of a single balance-sheet or income element.
Accounting archive: Organized set of accounting documents and records that the company keeps in order for consultation and control as defined by local regulations (varies by country).
accounting cycle: Sequence of steps that goes from recording transactions to closing the books and preparing the financial statements.
accounting equation: Fundamental equality stating that the assets of an entity always equal the sum of its liabilities plus its equity.
accounting error: Mistake in the recording or presentation of financial information that must be identified and corrected in due time.
accounting period: Defined interval of time for which the entity prepares and presents its financial statements to the users of information.
accounts payable: Payment obligation that the company assumes with a third party for goods or services received and not yet settled, recorded as a liability.
accounts receivable: Right to collect from a customer the outstanding amount of a sale already made and invoiced.
accrual: Basis under which revenues and expenses are recognized when they are earned or incurred, not when collected or paid.
accumulated depreciation: Total amount of depreciation recorded on an asset from its acquisition up to the present date.
acquisition cost: Total outlay incurred to obtain a good, including purchase price, freight, duties and directly attributable expenses.
adjusting entry: Entry made at closing to recognize pending revenues, expenses or items and to reflect the real balances.
advance payment to supplier: Disbursement that the buyer makes before receiving the merchandise or service, leaving the supplier obliged to complete the agreed delivery.
after-sales service: Set of services the company provides to the customer after the purchase, such as support, repair, or advice.
aging of receivables: Classification of accounts receivable according to the time elapsed since their due date or since their issuance.
allowance for doubtful accounts: Reserve that recognizes the estimated portion of accounts receivable that will probably not be collected from customers.
amortization: Allocation of the cost of an intangible asset or of a debt over a specified period of time.
asset: Resource controlled by the entity from which future economic benefits are expected, such as cash, inventories or property.
available inventory: Quantity of inventory physically in the warehouse, free of reservations, commitments or holds, ready for use or sale.
average inventory: Arithmetic average of the inventory at the beginning and end of a period, used as a basis for calculating management indicators.

B

backorder: Customer request that cannot be fulfilled immediately for lack of inventory and is recorded for future delivery.
balance: Outstanding amount resulting from subtracting the payments received from the total value of the debt owed by the customer.
balance sheet: Report that presents the assets, liabilities and equity of the entity at a given date.
bank account: Contract between a customer and a financial institution to deposit, withdraw, and manage money safely.
bank credit note: Credit that a bank records in an account for interest earned, refunds, or other items, increasing its balance.
bank debit note: Charge that a bank applies to an account for fees, interest, or other items, reducing its available balance.
bank deposit: Deposit of cash or checks made into a bank account in order to increase its balance.
bank loan: Sum of money provided by a bank to a customer, which must be repaid with interest within the agreed terms.
bank overdraft: Situation in which a bank account shows a negative balance, permitted by the bank within an authorized limit.
bank reconciliation: Process that compares a company's accounting records with the bank statement to explain and adjust any differences.
bank transfer: Electronic movement of funds from one account to another, without the use of physical cash between the parties.
banks: Account that records the balances a business keeps deposited with financial institutions and available for use.
barcode: Graphic representation of data using bars that can be read automatically to identify a product or document in a unique way.
batch: Set of units produced or purchased under homogeneous conditions, identified with a code that allows their control as a group.
beginning inventory: Value of the inventory available at the start of an accounting period, with which the record of that period's movements opens.
break-even point: Level of sales at which total revenues equal total costs, generating neither profit nor loss for the business.
Business formalization: Process by which an activity or business registers and meets legal requirements to operate within the formal framework as defined by local regulations (varies by country).
Business registration: Compulsory enrollment of the merchant and its establishment in the register kept by the chamber of commerce as defined by local regulations (varies by country).

C

capital: Contribution of resources that the owners commit to the business, forming the basis of its own financing.
cash: Account that records the cash on hand available to a business, including local currency and funds for immediate use.
cash basis: Basis of accounting that recognizes revenues and expenses only at the moment when the cash is received or paid.
cash budget: Projection of expected cash receipts and payments for a period, used to plan the availability of funds.
cash count: Physical count of the cash and documents in the register to verify that they match the recorded accounting balance.
cash equivalent: Short-term investment of high liquidity and low risk, convertible into cash for a known amount within a short time.
cash flow: Record of the cash inflows and outflows occurring in a business during a specified period.
Cash invoice: Invoice documenting a sale whose payment is made immediately or at the time of the transaction, without financing, as defined by local regulations (varies by country).
cash on hand: Money in bills and coins that an entity physically holds and can use immediately to make payments.
cash purchase: Purchase of goods whose amount is paid at the time of the transaction or delivery, leaving no outstanding balance with the supplier.
Cash receipt: Internal document that supports the receipt of cash into the company, stating date, amount and concept as defined by local regulations (varies by country).
cash sale: Transaction in which the buyer pays the full price at the same moment of receiving the goods or service.
certificate of quality: Document that certifies that a product meets defined specifications and quality levels, supporting its acceptance by the buyer.
certified public accountant: Professional with the training and license to prepare, certify and analyze the accounting information of entities.
Chamber of commerce: Entity that groups and registers merchants of a region, keeping the commercial register and certifying activity as defined by local regulations (varies by country).
chart of accounts: Ordered and coded list of all the accounts an entity uses to record its transactions.
check: Document by which a person instructs a bank to pay a specific sum to a named payee or to the bearer.
closing: Procedure by which the income statement accounts are settled and their balances are transferred to equity at period end.
closing entry: Record that cancels the balances of all accounts at the end of the period in order to start the next one.
Collection: Activity through which the treasury or another entity receives and administers funds from taxes and other obligations, as defined by local regulations (varies by country).
collections: Set of actions aimed at obtaining payment of the overdue debts that customers owe to the company.
commercial presentation: Form in which a product is offered to the market, defining content, packaging and grouping by which it reaches consumers.
consignment inventory: Goods delivered to a third party for sale without transferring ownership, remaining in the consignor's records until sold.
consignment sale: Sale in which the merchant receives goods from a supplier and pays only when they manage to sell them.
Consumption tax: Tax levied on the consumption of specific goods and services, such as food or beverages, applied on retail sales as defined by local regulations (varies by country).
contribution margin: Difference between the selling price and variable costs, the contribution each sale makes to cover fixed costs.
cost of sales: Value of the inventory delivered to customers during a period, recognised as an expense when the related revenue is recorded.
credit: Right side of an account, where increases in liabilities and equity and decreases in assets are recorded.
credit balance: Balance that results when the sum of the credits of an account is greater than the sum of its debits.
credit limit: Maximum amount of debt that the company authorizes a customer to keep outstanding at a given moment.
credit purchase: Purchase of goods whose payment is deferred according to an agreed term, creating a debt that the buyer assumes with the supplier.
credit sale: Sale in which payment is deferred and the buyer agrees to pay at a later agreed date.
credit term: Agreed period of time between the delivery of the goods and the payment due date.
current asset: Resource expected to be converted into cash, sold, or consumed within the normal operating cycle.
current liability: Obligation that the business must settle or pay within the normal operating cycle or within one year.
current ratio: Indicator that divides current assets by current liabilities to measure the ability to pay short-term debts.
customer: Person or entity that buys goods or services from a business, whether regularly or occasionally.
customer account statement: Report summarizing the transactions, charges, and payments of a customer with the company during a given period.
customer advance: Payment that the customer makes before receiving the good or service, on account of the final price.
customer complaint: Statement made by the customer to express dissatisfaction with a product, a service, or a charge received.
customer order: Formal request by the customer to acquire specific goods or services in stated quantities and conditions.
customer return: Return by the customer of purchased goods to get their money back or exchange them for another item.
customs value: Value assigned to merchandise during import clearance and used as the basis for determining the applicable duties and controls.
cycle count: Verification method that counts a portion of the items on a scheduled basis during the period, without halting operations.

D

debit: Left side of an account, where increases in assets and decreases in liabilities and equity are recorded.
debit balance: Balance that results when the sum of the debits of an account is greater than the sum of its credits.
Deductible tax: Tax paid on purchases that can be subtracted from the tax generated on sales, reducing the amount payable as defined by local regulations (varies by country).
delivery lead time: Time committed by the supplier to deliver the requested goods, counted from the confirmation of the order or the agreed date.
delivery note: Document that accompanies the movement of merchandise and details the goods sent, serving as proof of their delivery or transfer.
delivery of goods: Act of placing the acquired goods in the hands of the customer or their representative, thus fulfilling the sale commitment.
depreciation: Systematic allocation of the cost of a fixed asset over its useful life due to use or wear.
Digital certificate: Electronic file issued by an authorized authority that certifies the holder's identity and supports the electronic signature as defined by local regulations (varies by country).
Disbursement voucher: Internal document that supports the outflow of money from the company for a payment, stating date, beneficiary and concept as defined by local regulations (varies by country).
dispatch: Formal handover of goods to the customer or carrier, supported by documents that certify the outgoing movement of the merchandise.
dispatch note: Document that accompanies the departure and transport of merchandise to its destination, detailing the goods sent and their recipient.
Document retention: Obligation to keep and safeguard accounting vouchers and supporting records for the period required by law, as defined by local regulations (varies by country).
double-entry bookkeeping: Recording system in which every transaction affects at least two accounts, keeping debits and credits in balance.

E

early payment discount: Discount granted to the buyer when settling the debt before the agreed due date, as an incentive to pay early.
Electronic invoicing: System that issues, transmits and validates invoices in digital format before the tax authority, replacing paper and validating numbering per local regulations (varies by country).
Electronic money: Monetary value stored and transferred by electronic means, accepted as a means of payment by various entities as defined by local regulations (varies by country).
Electronic signature: Method that identifies and links a person to a digital document, granting it legal validity in transactions as defined by local regulations (varies by country).
ending inventory: Value of the inventory existing at the close of an accounting period, determined by physical count or by perpetual records.
equity: Residual interest in the assets of the entity after deducting all liabilities; it includes contributions and accumulated results.
Equivalent document: Document that, without being an invoice, supports a transaction by legal provision, such as sales to exempt consumers as defined by local regulations (varies by country).
Exempt: Good, service or person that by legal provision is not covered by a tax and therefore generates no tax obligation, as defined by local regulations (varies by country).
expenditure: Outflow of resources from the entity that may correspond to an expense, a cost or the payment of an obligation.
expense: Decrease in the economic benefits of the period, related to operations, that reduces the entity's equity.
expiry date: Deadline up to which a good retains the quality and safety conditions required for its consumption or use.

F

field salesperson: Salesperson who carries out their work outside the establishment, visiting customers at their premises or homes.
FIFO method: Valuation criterion whereby the first units purchased are the first sold or consumed, leaving the most recent ones in inventory.
Final consumer: Person who acquires goods or services for personal use rather than resale, and therefore cannot deduct the tax paid as defined by local regulations (varies by country).
financial cost: Outlay incurred to obtain and maintain financing for the business, such as the interest paid on a debt.
financial expense: Expenditure related to the financial operations of the business, such as fees, interest paid, or exchange differences.
financial income: Resource obtained from the financial activities of the business, such as interest earned, dividends, or investment returns.
financial lease: Contract that grants the use of an asset in exchange for installments, with an option to purchase at the end of the term.
finished goods: Good that has completed the entire manufacturing process and is available for sale to the end customer.
fiscal year: Annual cycle or established period in which the entity carries out its operations and closes its accounts.
fixed asset: Tangible asset of lasting use that the business employs in its operations and that is not intended for sale.
freight: Service of transporting goods from an origin to a destination, whose use generates a cost that may be borne by the buyer or the seller.
freight cost: Amount that must be paid to move the goods to their destination, considered part of the acquisition cost of the merchandise.
Functional currency: Currency of the main economic environment in which the company operates, in which its financial statements are recorded and presented as defined by local regulations (varies by country).

G

general journal: Main book in which all the transactions of the entity are recorded chronologically through journal entries, one after another.
general ledger: Book that groups entries by account, showing the movements and the balance of each one of them.
Generally Accepted Accounting Principles: Set of basic concepts and conventions that guide the preparation of accounting information using uniform criteria.
goods receipt: Verification and acceptance of the goods delivered by a supplier, checking quantities, condition and correspondence with what was requested before admitting them.
gross margin: Ratio that relates gross profit to revenues, showing what proportion of sales remains after direct costs.
gross profit: Difference between the revenues obtained from sales and the direct cost of the goods or services that were sold.

How to use this dictionary

Look up your term by the letter it starts with inside this part's block. Each language version follows its own alphabetical order, so a term may fall under a different letter depending on the language you type it in: for instance, an English word may start with a letter that does not match the Spanish one.

The definitions are general reference material and explain the concept as it is used in day-to-day business. They do not replace professional advice: if a term affects your taxes, your financial statements or a legal decision, confirm it with an accountant before applying it.

How the complete dictionary is organized

The dictionary has three parts: part 1 covers the letters A to G, part 2 the letters H to M and part 3 the letters N to Z. If a term is not here, check the other two parts by its first letter. It is the same split as a paper dictionary published in three volumes: letters are never mixed between volumes.

Common mistakes when looking up an accounting term

Readers usually get lost for three reasons: looking for a plural when the entry is singular (or the other way around), typing a word without its accents and expecting to find it accented, and confusing similar terms (for example, profit and margin). If you cannot find a word, try its singular form or check the neighbouring concept: it is almost always defined next to its pair.

Key terms in this block

This block includes, among others, these essential terms: abnormal shrinkage, backorder, cash budget, Consumption tax, debit balance, expense. All of them show up again and again in the daily work of buying, storing and selling, so they are worth mastering.

Frequently asked questions

Does the dictionary include every accounting term? No: it is a selection of the terms most used by a business that buys and sells goods. Specialized topics are explained in the Accounting Manual lessons.

Why is a term I know missing from this part? Because its first letter belongs to another block: check parts 1, 2 and 3 according to the letter the word starts with.

Are the definitions identical in the three languages? Each version explains the concept in its own language and with its own terms; it is not a word-for-word translation, although the underlying meaning is the same.

Can I use this as accounting advice? No. It is reference material to understand the vocabulary; specific decisions are discussed with an accountant.

Reference glossary from the Kardex Tauro team, the inventory software for small businesses.

Labels:

#accounting dictionary #glossary #accounting