New Jersey Accounting Dictionary & Bookkeeping Glossary
This New Jersey accounting dictionary is a plain-English glossary of the accounting and bookkeeping terms that New Jersey small business owners run into most often. Whether you are registering a new business in NJ, filing sales tax, or reviewing your financial statements, use this New Jersey accounting dictionary and knowledge base from AMX Business and Bookkeeping to understand the language of your finances. Need to run the numbers? Try our free accounting 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. AMX offers dedicated 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. Our financial reporting services keep yours accurate.
- Bookkeeping
- The day-to-day recording of financial transactions, including sales, purchases, receipts, and payments, that forms the foundation of your accounting records. Explore 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. Use our break-even calculator to find yours.
- Budget
- A financial plan that estimates income and expenses over a set period, helping you control spending and set goals.
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.
- 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.
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. AMX provides 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. Use our NJ sales tax calculator for quick estimates.
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. Use our profit margin calculator to measure yours.
- 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.
- 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. AMX offers 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.
Need help making sense of your numbers?
Keep this New Jersey accounting dictionary handy, and when you need real help, AMX Business and Bookkeeping helps New Jersey small businesses keep accurate books and understand their finances.