Welcome to the next installment of my accounting vocabulary series, where I define some of the most important vocabulary words in the field of accounting. Here are a few important accounting vocabulary terms starting with letters G through J. View D-F here, and you can read A-C here!

Learning the vocabulary involved within accounting practices is important because again, it allows for a deeper level of education, whether the reader is a consumer, a student or even an accountant.

Accounting does not need to be hard to understand. With the right vocabulary and clear definitions, it can be simple and concise, informing consumer decisions in a very important and thorough way.


General Ledger: A set of numbered accounts that a company keeps for its accounting records. It provides an entire record of financial transactions throughout a company’s life. It also has account information necessary for preparing financial statements. In a general ledger, one can find liabilities, assets, owner’s equity, expenses, and revenues.

 

Goodwill: an intangible asset that comes about when one company acquires another for a premium value. Goodwill includes the value of a company’s brand name, good customer relations, good employee relations, a substantial customer base, and any patents or proprietary technology.

 

Gross Earnings: for a company, see “gross profit” definition. For an individual, gross earnings  refers to the person’s total income before any tax deductions or adjustments are applied.

 

Gross Margin: the percent of total sales revenue a company retains after deducting the costs associated with producing its goods and services. This is calculated by dividing the gross profit (see next definition) by the revenue.

 

Gross Profit: the profit a company gains after deducting the costs of selling and making its products, or the costs associated with providing its services. It can be calculated by subtracting the cost of the goods sold from the company’s total revenue.

 

Historical data: a record of your spending from the past. In order to build a budget that is tailored to your needs, you need to track your finances so that you can use historical data. You will then be able to create a budget.

 

Holder: a contract holder is a person or organization who owns the rights to an obligation or debt. Under provision of the contract, a contract holder is owed the benefits stated in the contract at a future date.

 

Income: the money that a business or individual receives in exchange for a good or service. Income can also be acquired by investing capital. People consume income in order to fuel day-to-day expenses. While most people 65 or under get their income from a job, retirees often get most of their income from pensions, investments, and Social Security.

 

Income statement: a financial statement that reports the financial performance of a company over a given accounting period. It involves a summary of how the business gains revenue or makes expenses through both operating and non-operating activities. It also provides the net profit or loss over a specific accounting period.

 

Intangible asset: An asset that cannot be touched or physically held. In addition to goodwill and brand recognition, this category includes corporate intellectual property such as copyright, patents, and trademarks.

 

Journal: a detailed account of all of the financial transactions of a business. A journal is kept so that the information can be used in the future. The information can also be transferred to other official accounting records, like the general ledger. In a journal, one can find the date of each transaction, the accounts that were affected, and the amounts.

 

I hope you enjoyed this installment of my accounting vocabulary series. Stay tuned for the rest of the accounting alphabet.