When you start a business, you quickly realize that you need to understand accounting terms. Whether you are dealing with your accountant, bookkeeper, or doing the bookkeeping yourself, you will find accounting abbreviations. Most business people have heard of “Accounts Payable” (AP) and “Accounts Receivable” (AR). But what about AJE? That stands for “Journal Entry Adjustment” which you will likely find when your accountant is ready to close his books for your business fiscal year.
I have been in business for several years and have compiled a list below of some of the most common accounting abbreviations and terms that you will come across. Having this handy list available helps you focus on your business rather than spending undue time figuring out accounting terms. Even if you use accounting software like QuickBooks, it helps to become familiar with these terms.
- ABC: Activity-based costing
- AJE: Journal entry setting
- AP: Debts to pay
- Arkansas: Accounts receivable
- TO: Asset turnover
- Bed and breakfast: Opening balance (see also: EB)
- BV: Value in books
- CJE: Closing journal entry
- CM: Contribution margin (= Sales minus variable costs)
- COGM: Cost of goods manufactured
- Cr: Credit
- CVP: Cost-Volume-Profit
- Dr.: Debit
- EB: Ending balance (see also BB)
- EPS: Earnings per share
- EVE: Economic value added
- FIFO: First in, first out (see also: LIFO)
- FC: Fixed costs (see also: VC)
- FS: Financial statements
- FYE: End of fiscal year; (for example: FYE2010)
- GAAP: Generally Accepted Accounting Principles
- GL: Ledger
- IT IS: Statement of income
- I SO: International Standards Organization
- I: Journal entry
- HIT: Just in time
- LIFO: Last in, first out (see also: FIFO)
- LOC: Credit line
- OR: Net income
- Oh: General expenses
- PL: Earnings and loses
- P.M: Profit margin
- PVA: Process value analysis
- D: Retained earnings
- KING: Return of investment
- SAG expenses: Selling, administrative and general expenses
- SHE: Stockholders’ equity
- SP: Selling price (price of goods / services sold)
- tuberculosis: Trial balance
- VC: Variable costs (see also: FC)
- WIP: Work in progress
There are many other accounting terms, but the terms above are the ones that I have found to be a good start in helping you understand accounting.