Accounting professionals use a variety of terms and acronyms that are common within the
industry. However, those terms may sound like a foreign language or a magical incantation to
those that aren’t familiar with them. Typically applied to businesses, they can also be relevant
in relation to individuals.
Often abbreviated as AR, it’s the money that customers owe a business for products or services
that have been provided/delivered.
Abbreviated as AP, it’s the money a company or business owes their suppliers and vendors for
goods or services.
An asset is anything that has current or future monetary value, such as rental property, patents,
vehicles, and equipment.
It’s a financial report providing a summary of what a company owns, owes, and shareholder
Known as CAP, it represents the value of an asset such as goods or cash.
CF is the revenue and anticipated expense a business expects to generate.
Referred to as QE, in its simplest form, equity is what a company has when debts (liabilities) are
subtracted from assets.
There are both long-term and short-term liabilities. A short-term liability (STL) is money owed
within a year. Long-term liabilities (LTL) are money owed over multiple years.
Limited Liability Company
LLCs have a business structure in which owners/members can’t be sued for debts or liabilities
the company incurs.
Net income (NI) is also known as net profit. It’s the money a company makes after subtracting
all expenses from all income generated.
Return on Investment
ROI is the amount of financial gain/profit that’s expected to be made compared to the price
that was paid (invested).
An IRA or Roth IRA are retirement savings accounts. Individuals can divert pre-tax money to an
IRA and the funds aren’t taxed until they’re withdrawn. A Roth IRA isn’t tax deductible, but
funds aren’t taxed when withdrawn.
At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs. We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!