If you are considering a career in accounting, there are several basic terms and concepts with which you should be familiar. In fact, even if all you do is balance your own checkbook or plan a household budget, you should know — and be able to use — these concepts. They are the essence of everyday money management:
Income: This is any amount of money taken in. For a company, this usually means sales. For most households, income usually comes in the form of a paycheck. Income can also be a tip, refund, rebate or the proceeds from a winning lottery ticket! When keeping a set of financial records, income is recorded in the form of a credit.
Expense: This is any amount of money paid out. When you pay your monthly electric bill, that’s an expense. So is the money you paid for your morning cup of coffee. When keeping records, expenses are recorded in the form of a debit.
Asset: Simply stated, an asset is anything you own. If you have money in the bank, that’s an asset. So is your car — if it’s paid off. Your furniture, clothes and other personal belonging are all assets.
Liabilities: Liabilities are monies owed. If you have a credit card balance, that’s a liability. So is the money still owed on an apartment or auto lease, even if your payments are only due monthly.
Accounts Receivable: This is money owed to you. It can be considered an asset. (But they’re only really an asset when they’re collected!)
Accounts Payable: This is money you owe to someone else. It’s a liability.
Equity: Equity is the ultimate value of something, such as a home or business, once you subtract liabilities from assets. For example, a home valued at $300,000 and an outstanding mortgage of $200,000 has $100,000 in equity.
Appreciation: This means “gaining value over time.” Real estate traditionally appreciates in the long term. The value of a company’s stock can appreciate if the business grows and prospers.
Depreciation: This means “losing value over a time.” Computers and other electronics depreciate quickly as their technology is virtually obsolete after just a few months. It’s often said that an automobile’s value depreciates by up to a third the moment you drive it off the dealer’s lot!
Learn Accounting and Computer Applications at Everest College in Windsor
If you live in or near Windsor, Ontario, you can learn the basics of accounting and office-based computer systems at Everest College of Business, Technology and Health Care’s Windsor campus. This intensive seven-month program covers such topics as:
- Introduction to Computers
- Windows Fundamentals
- Microsoft Word
- Microsoft Excel
- Bookkeeping and Financial Accounting
- Computerized Accounting with Simply
- Computerized Accounting with ACCPAC
- Economics
- Business Law
- Effective Business Writing
For More Information
For more information on Everest’s Accounting and Computer Applications program, or information on other career education programs, contact Everest College today!
