Understanding Accounting Vocabulary

The following article is an excerpt from the free online course “Using Finance & Accounting in Your Small Business”.

When you learn something new like accounting concepts and terms, it helps to create links between what you know and what you are trying to learn. In some ways, it is like learning a second language and decoding the new word is part of the learning process. For example, trying to translate the Spanish word necesario you might brainstorm with necessary – and you would be right. How about blanco? Blanco is like blank which is like white. So, blanco is Spanish for the color white.

Try to make some logical connections about the accounting vocabulary. Take the word – accounting – and think about it. Really, the accounting system is a basic counting of what goes on in your business.

Lets move on to transactions. Transactions are the business activities, or actions, that build day by day and become your expenses and income. Try to think about the term – transactions. Actions are business activities, and trans means across or thru. These are the basic building blocks of an accounting system. Transactions are to...