Topic: English for Accounting 2

VOCABULARY REVIEW: Accounting

Need to review common terms used in accounting? We've got you covered!

Balance sheet
A balance sheet is a financial statement that shows a company's assets, liabilities, and equity at a specific point in time. It follows the accounting equation.
Example: At the end of the year, a company prepares a balance sheet to show its financial position on December 31.

Income statement
An income statement reports a company's revenues and expenses over a period of time to show profit or loss. It is also called a profit and loss statement.
Example: A company uses its income statement to see how much profit it made during the last quarter.

General ledger
The general ledger is a complete record of all financial transactions of a business, organized by accounts. It is the main source for preparing financial statements.
Example: Every sale, expense, and payment is recorded in the general ledger under the correct account.

Journal entry
A journal entry is the first step in recording a transaction. Each entry usually includes a debit and a credit.
Example: When a company pays rent, it records a debit to rent expense and a credit to cash.

Trial balance
A trial balance is a report that lists all accounts and their balances to check that total debits equal total credits. It helps identify errors.
Example: Before preparing financial statements, an accountant reviews the trial balance to ensure accuracy.

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