Account balance is the difference between the debit and the credit side of a T account.

Accounting is a service-based profession that provides reliable and relevant financial information useful in making decisions.

Accounts receivable refer to amounts of future cash receipts that are due from customers (i.e., amounts to be collected in the future). Accounts receivable are shown on the asset side of the balance sheet.

Accrual (or accrual-based) accounting recognizes the effects of accounting events when such events occur regardless of the time cash is exchanged.

Accrued expenses are expenses incurred but not yet paid in cash. When recorded, such expenses are usually shown in the liabilities section of the balance sheet.

Accrued revenue is revenue earned but not yet received. When recorded, such amounts are usually shown as interest receivable in the balance sheet and interest revenue in the income statement.

Accumulated depreciation represents an estimated cost of an asset used in operations. Accumulated depreciation is a cumulative of all depreciation expenses recognized for a particular asset. Accumulated depreciation is an example of a contra asset account. This account is included in the balance sheet under related asset accounts.

Adjusting entries adjust the account balances before the final financial statements are prepared. Each adjusting entry affects one balance sheet account and one income statement account.

Allocation is a process of assigning a portion of an entire amount to each of several accounting periods.

Allowance for doubtful accounts (also called allowance or reserve for bad debts) is the company's best estimate of uncollectible accounts receivable. It is determined based on certain historical or current data about the company's financial activity.

Allowance method of accounting for bad debts is the practice of reporting accounts receivable at the net realizable value. This method involves estimating uncollectible accounts at the end of each period.

Amortization is allocation of the cost of intangible assets to expense in a systematic and rational manner over the useful life of the asset.

Asset exchange transactions occur when only asset accounts are engaged in a transaction. For example, collection of cash on accounts receivable is an asset exchange transaction. Total assets remain unchanged after such transactions.

Asset source transactions result in an increase in an asset account and in one of the claim accounts (liability or equity accounts).

Asset use transactions result in a decrease in an asset account and in one of the claim accounts (liability or equity accounts).

Assets are economic recourses of a business used to accomplish its main goal, i.e., increase owners' wealth.

Balance sheet presents assets, liabilities and owner's equity at a specific date. A balance sheet is also called Statement of Financial Position.

Book value, also referred to as carrying value, is the result of asset and related contra asset accounts offset. In other words, book value is the difference between an asset account (i.e.,cost) and corresponding contra asset account (i.e., accumulated depreciation).

• Accounting Glossary
• Letters A-B

• A-BL-Q
• C-DR-Z
• E-K

• Accounting Lectures
• Accounting Exercises