Students who decide to pursue courses in the Commerce stream beyond Class 10 will be required to study certain new subjects as part of their curriculum. To grasp subjects in the course, bookkeeping and accounting demand in-depth and specific information and a lot of practice.
Because the first chapters teach the most basic and important principles of a subject, it is necessary to keep in mind all of these accounting assignment help for as long as possible. However, simply recalling the concepts is insufficient. Why? Because accounting is a subject that encompasses several computations, statements, and procedures.
To accomplish their exam on time, students must retain the ideas and properly practise the computations and statements while studying for the Accountancy exams. Subject-specific abbreviations are commonly used to save long words and allocate them more effectively somewhere. Understanding these abbreviations in accounting will assist you in passing tests and provide you with a significant advantage when working in the profession of accounting.
20 Commonly used Abbreviations in Accounting:
- Fixed and current assets (FA, CA):
Definition of fixed and current assets: Current assets (CA) can be easily turned into cash in the next 12 months. This could be liquid assets, inventory, or bill receivable. Fixed assets, such as property investment, land, or big machinery, are long-term investments that will certainly benefit a company for more than a year.
- General ledger (GL):
The general ledger (GL) is a comprehensive recording of a corporation’s financial operations across its lifespan.
- Accounts payable (AP):
Accounts payable (AP) is the money owed by a corporation to creditors (sellers, for example) in exchange for goods and services delivered.
- Receivables (Accounts Receivable) (AR):
The amount of money owed to an organisation by clients or customers after products or services have been provided and/or utilised is known as accounts receivable (AR).
- Balance sheet (BS):
A balance sheet (BS) is a financial statement that shows assets (what it possesses), liabilities (what it borrows), and proprietor or shareholder equity at a specific point in time.
- Certified Public Accountant (CPA):
- CPA stood for a certified public accountant (CPA)
- Definition of a certified public accountant (CPA): An accountant who has taken a standardised CPA exam and has satisfied government-mandated real work experience and academic criteria to become a CPA.
- Cash Flow (CF):
Cash flow (CF) is defined as the income or expenditure that is bound to occur over time through business operations (sales, production, etc.).
- Capital (CAP):
A financial asset or the amount of a capital product, such as cash or products, is referred to as capital (CAP). Working capital is evaluated by subtracting current assets from current liabilities, or the amount of cash or assets an organisation can put to work.
- Credit (CR):
Credit (CR) definition: An accounting transaction that, depending on the transaction, may reduce assets or enhance shareholders’ equity on an organisation’s balance sheet. Every item will have two registered entries when applying the double-entry accounting method: a credit and a debit.
- Cost of goods sold (COGS):
This is one of the commonly used abbreviations in accounting. The direct expenses concerned with making the commodities sold by a firm are referred to as the cost of goods sold (COGS). Calculating this will vary depending on what is being manufactured; however, it may involve the cost of raw materials (components) and the amount of labour used in the manufacturing process.
- Expenses (FE, VE, AE, OE):
- Meaning of expenses (FE, VE, AE, OE): The fixed, variable, accruing, or daily charges that a firm may incur due to its operations.
- Fixed expenses (FE) are expenses that are made on a regular basis, such as rent.
- Variable expenses (VE) are costs that fluctuate over time, such as labour costs.
- An accrued expense (AE) is an expense that has been incurred but not yet paid.
- Operation expenses (OE) are business costs that are not involved in manufacturing goods or services, such as advertisement, real estate taxes, or security.
- Debt (DR):
Debit (DR) explanation: An bookkeeping entry on a company’s balance sheet that results in a rise in assets or a reduction in liabilities.
- Enrolled agent (EA):
Meaning of an enrolled agent (EA): A tax practitioner who advises taxpayers in cases involving the Internal Revenue Service (IRS).
- Equity and owner’s equity are two types of equity (OE):
Definition of equity and owner’s equity (OE): Equity is defined as assets subtracting liabilities in the broadest sense. An owner’s equity is often expressed in terms of the proportion of the business’s shares that a person owns. Shareholders are the individuals who hold the shares of a particular organisation.
- Statement of Profit and Loss (P&L):
A profit and loss statement (P&L) is a business statement that summarises a business’s financial situation by looking at sales, expenditures, and spending over a certain time period, such as quarterly or periodically.
- Investment return (ROI):
Return on investment (ROI) is applied to assess financial results concerning the amount of capital invested. The return on investment (ROI) is evaluated by dividing the net profit by the investment. Frequently, the answer is represented as a percentage. ROI is frequently used as abbreviations in accounting.
- Present value (PV):
The present value of an anticipated amount of cash based on a specified rate of return is known as the present value (PV).
- Net Income (NI):
Meaning of net income (NI): A corporation’s total revenues, often known as net profit. Total spendings are subtracted from total revenues to arrive at net income.
- Accounting principles that are widely recognised (GAAP):
Definition of GAAP (Generally Accepted Accounting Principles): Companies must follow a series of standards and principles defined by the accounting sector when disclosing financial information. For all listed companies, following these regulations is very important.
- A limited liability corporation (LLC):
A limited liability corporation (LLC) is a business format in which members are not accountable for the firm’s obligations or liabilities. This can save corporation proprietors from losing their entire life savings if the company is sued.
Accounting abbreviations play a vital role in accounting concepts. We have learned important and commonly used abbreviations in accounting. So, every commerce student who wants to pursue further study must go through these abbreviations. The use of abbreviations helps the students to minimise their time. We hope this blog will be very helpful to you in vanishing all your doubts.