New Jersey accounting dictionary and bookkeeping glossary
Plain-English definitions of the 48 accounting and bookkeeping terms New Jersey business owners run into most. Whether you are registering a new business, filing sales tax or reading your first balance sheet, this is the language of your finances explained. Need to run the numbers? Try our free calculators.
A
- Accounts Payable (AP)
- Money your business owes to suppliers and vendors for goods or services purchased on credit. It appears as a current liability on your balance sheet. See our accounts payable and receivable services.
- Accounts Receivable (AR)
- Money owed to your business by customers for products or services already delivered. It is recorded as a current asset until collected. See our AR and AP management.
- Accrual Accounting
- A method that records revenue when earned and expenses when incurred, regardless of when cash changes hands. It gives a more accurate picture of profitability than cash accounting.
- Amortization
- Spreading the cost of an intangible asset (like a patent or loan) over its useful life, similar to how depreciation works for physical assets.
- Asset
- Anything of value your business owns, such as cash, equipment, inventory, or accounts receivable.
B
- Balance Sheet
- A financial statement showing what your business owns (assets), owes (liabilities), and the owner's equity at a specific point in time. See our financial reporting services.
- Bookkeeping
- The day-to-day recording of financial transactions, including sales, purchases, receipts, and payments, that forms the foundation of your accounting records. See our outsourced bookkeeping services.
- Break-Even Point
- The level of sales at which total revenue equals total costs, so the business makes neither a profit nor a loss. See our break-even calculator.
- Budget
- A financial plan that estimates income and expenses over a set period, helping you control spending and set goals. See our budgeting and planning.
C
- Cash Flow
- The movement of money into and out of your business. Positive cash flow means more money is coming in than going out. See our cash flow projection calculator.
- Cash Accounting
- A method that records revenue and expenses only when cash is actually received or paid. It is simpler than accrual accounting and common among smaller businesses.
- Chart of Accounts
- An organized list of every account used to categorize your business's financial transactions, such as revenue, expenses, assets, and liabilities.
- Cost of Goods Sold (COGS)
- The direct costs of producing the goods or services your business sells, including materials and direct labor.
- Credit
- An entry on the right side of a double-entry ledger. Depending on the account, it can increase liabilities and equity or decrease assets.
D
- Debit
- An entry on the left side of a double-entry ledger. Depending on the account, it can increase assets or decrease liabilities and equity.
- Depreciation
- The gradual reduction in value of a physical asset over its useful life, recorded as an expense to match cost with the periods that benefit from the asset.
- Double-Entry Bookkeeping
- A system where every transaction affects at least two accounts, keeping the accounting equation (Assets = Liabilities + Equity) in balance.
E
- EIN (Employer Identification Number)
- A federal tax ID number issued by the IRS to identify your business. New Jersey businesses typically need an EIN before registering with the NJ Division of Revenue and Enterprise Services.
- Equity
- The owner's stake in the business, calculated as total assets minus total liabilities. Also called owner's equity or net worth.
- Expense
- The cost of running your business, such as rent, utilities, wages, and supplies, which reduces net income.
F
- Fixed Cost
- An expense that stays the same regardless of sales volume, such as rent or insurance.
- Financial Statements
- Formal records of a business's financial activities, primarily the income statement, balance sheet, and cash flow statement. See our financial reporting and forecasting.
- Fiscal Year
- A 12-month period a business uses for accounting and tax reporting, which does not have to match the calendar year.
G
- General Ledger
- The master record containing all of a business's financial accounts and transactions, used to prepare financial statements.
- GAAP (Generally Accepted Accounting Principles)
- The standard framework of accounting rules and guidelines used in the United States to ensure consistency and comparability.
- Gross Profit
- Revenue minus the cost of goods sold, before subtracting operating expenses, taxes, and interest. See our profit margin calculator.
I
- Income Statement
- Also called a profit and loss (P&L) statement, it summarizes revenue, expenses, and net profit or loss over a period.
- Inventory
- The goods a business holds for sale, along with raw materials and work in progress. It is recorded as a current asset. See our inventory management support.
- Invoice
- A document sent to a customer requesting payment for goods or services, listing quantities, prices, and payment terms.
L
- Liability
- A financial obligation or debt your business owes to others, such as loans, accounts payable, or taxes due.
- Liquidity
- How easily a business can convert assets into cash to meet short-term obligations.
N
- Net Income
- The bottom-line profit remaining after all expenses, taxes, and costs are subtracted from total revenue.
- NJ Sales Tax
- New Jersey's statewide sales tax rate is 6.625%. Most businesses selling taxable goods or services in NJ must register to collect and remit it to the Division of Taxation. See our NJ sales tax calculator.
O
- Operating Expenses
- The ongoing costs of running your business that are not directly tied to producing goods, such as rent, marketing, and salaries.
- Overhead
- Indirect costs required to operate that cannot be traced to a specific product or service, such as utilities and administrative wages.
P
- Payroll
- The process of paying employees, including calculating wages, withholding taxes, and remitting payroll taxes to federal and NJ state agencies.
- Profit Margin
- The percentage of revenue that remains as profit after expenses. See our profit margin calculator.
- Profit and Loss Statement (P&L)
- Another name for the income statement, showing whether your business made a profit or loss over a period.
R
- Reconciliation
- The process of comparing your internal records against bank or credit card statements to ensure they match and catch errors. See our outsourced bookkeeping services.
- Revenue
- The total income a business earns from its normal operations before any expenses are deducted. Also called sales or turnover.
- Retained Earnings
- The cumulative net profit a business keeps and reinvests rather than distributing to owners.
S
- Sales Tax
- A tax charged on the sale of certain goods and services, collected from customers and remitted to the state.
- Software Consulting
- Guidance on choosing and setting up accounting software such as QuickBooks. See our small business software consulting.
- Statement of Cash Flows
- A financial statement that shows how cash moved through operating, investing, and financing activities over a period.
T
- Trial Balance
- A report listing all ledger account balances to verify that total debits equal total credits before preparing financial statements.
- Tax Deduction
- An eligible business expense that reduces taxable income, lowering the amount of tax owed.
W
- Working Capital
- Current assets minus current liabilities. It measures a business's short-term financial health and ability to cover day-to-day operations.
- Write-Off
- Removing an asset or uncollectible amount from the books because it no longer has value, such as bad debt.
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