Accounting Terminology: A fun guide to accounting and its terms!

Accounting Terminology
Do you think that accounting terms are too difficult to understand? As an entrepreneur, you don’t have to dive into the science of accounting, but you should understand the basic terminology to know how to deal with your accountant. In this brief and interesting guide, we present to you the most important accounting terms in an interesting, shorthand and fun style. Read them now.

share this content

Reading Time: 4 minutes

Entrepreneurs think that cloud accounting is a complex science which stirs up madness.

let alone if you integrate the cloud with it.

Things will really get bad, and it will become impossible to understand.

In Qoyod, We understand the reason for these fears, because we start from the principle of simplification.

Qoyod cloud accounting software does not even require accounting experience to start using it.

The same principle applies to content that we are very careful to prepare and publish on the site’s blog (such as the article currently being read).

In order to ensure the lightness and quality of the content will not be longer than these lines.

let’s take an enjoyable tour of what accounting is, its types and the most important terms.

 

Synopsis about cloud accounting

  • A stereotypical accounting concept is a program on a computer running on a local server, and its data is stored on a hard drive.

Cloud accounting is a bit different because it consists of two words: accounting and cloud.

The word “cloud” means hosting your accounting business on the Internet for easy access, flexibility in auditing, and extreme security.

Accounting is the regular and comprehensive recording of all financial transactions for a particular business;

So cloud accounting is a regular and comprehensive recording process for various financial transactions on cloud software for easy auditing, review, and analysis.

Accounting is one of the most important functions due to the sensitive role it plays.

The accounting team may consist of one individual in the case of small and medium Enterprises or a large department in the case of large enterprises.

Types of cloud accounting

There are four main types of cloud accounting:

2.1-Public cloud

Companies are resorting to the public cloud in order to get more storage space; the most popular public cloud providers are Amazon and Google.

The reason why this type of cloud is used for collaborative projects or software development is because, in addition to the huge storage capacity, it offers a lot of platforms.

2.2-Private Cloud

The fundamental difference between a private cloud and a public cloud is in the duration of use, as the use of a private cloud is temporary.

Private clouds provide a very special system, protected by the highest standards, and enable access to specific people.

It is often resorted to by companies that have strict standards for the way their information and data are presented.

2.3-Hybrid cloud

Just as its name indicates, it is a combination of public and private clouds.

Companies can integrate their data, information, and software in both clouds into a unified operating system.

This helps companies work efficiently and know which system is better for their software and applications.

2.4-Hybrid multimedia cloud

Hybrid multimedia cloud is a combination of the same types of cloud accounting:

For example, the company uses two or more types together as well as different service providers, including SaaS and PaaS.

Companies often resort to this type for autonomy and the elimination of monopolies until they determine in confidence the best system for them to adopt definitively.

The most important accounting terms that you cannot ignore

You may be wondering: and what is the point of knowing accounting terms? 

And I answer you: To understand the reality of your work in general, determine your expectations of the accountant who works in your company,

Be aware of the reports you will receive and their usefulness, and the information they will provide you.

Let’s get acquainted with the most important accounting terms that you cannot ignore:

  • Assets: These are resources that your company fully owns and that have benefits in the future.

There are many types of assets, including fixed assets (assets that the company use to carry out its work, such as machinery, land and buildings, cars, and furniture).

Intangible assets (assets whose impact can be clearly felt on your business, such as a good reputation, brand, trade name, intellectual property rights, and goodwill)

  • Liabilities: These are agreements made by the company with others (like investors or obtaining loans) and must be paid on time.

 

  • Equity: They are the owners’ right determined after deducting the obligations, then subtracting the assets and liabilities after which the company’s capital is added in addition to the undistributed profits, then subtracting the owners’ withdrawal and net loss.

 

  • Revenues: It is what the company achieves from the sale of its services/products, and revenues refer to the total money received by the company for conducting its business. 

 

  • Expenses: These are the operating expenses that the company must pay to achieve revenues, such as: wages and salaries, rental expenses, electricity, internet, and a website.

 

  • Net profit: It is when revenues increase and expenses decrease during a specific period of time; it may be monthly or annual.

 

  • Net loss: It is the expense exceeding revenues during a specific period of time; this means it is the opposite of net profit.

 

  • Accounting equation: It means the budget equation that defines the two main aspects: liabilities and assets, and they must be equal as follows: Assets = liabilities; after adding capital (Property Rights), they become like this: assets = Property Rights + liabilities.

These are the most important terms that you cannot ignore as an entrepreneur or executive director of a Small or medium enterprise.

You can always contact us if you need any clarification or additional assistance about a specific part of accounting.

The conclusion

Accounting is an independent and existing field and science that has specialists (accountants) that companies resort to hiring to help them manage the accounting process,

But this does not prevent you, as an entrepreneur, from knowing some basic information about it.

such as the one discussed in this article, to paint a clear picture of what the accountant does and the role of accounting in developing your business.

By the way, Qoyod provides you with a 14-day free trial of Qoyod cloud accounting software.

which is easy to use without the need for much accounting experience. Try it now for free.

Tags

Register in Newsletter !

The most important news and stories for entrepreneurs

More contents from qoyod

Verify the tax number
Blog

Verify the tax number in Saudi Arabia

In a world full of financial and tax challenges, the tax number plays a vital role in ensuring compliance with tax laws and identifying institutions and individuals registered within the tax system in the Kingdom of Saudi Arabia. The tax number

اقراء المزيد

Start your Free Trial !

Easier accounting

qoyod