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 K through N. View G-H here, 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.
Ledger- A book containing financial transactions of accounts
Lender- A financial institution or investor who grants a borrower money, with the promise of receiving money back, typically with interest costs
Liabilities- Assets owed to a lender. Current Liabilities are typically paid back within a year. Long-term Liabilities are paid over a longer period of time (mortgage, bond, etc.)
Liquidity- An asset that can quickly/ easily be converted to cash
Marginal Cost- The amount of money charged for producing an additional unit
Marginal Revenue- The amount of money that will be made from selling an additional unit
Market Interest Rate- An interest rate applied to the amount being borrowed; changes based on supply and demand
Market Share- The percentage of revenue from a sale that the company keeps
Net Assets- The asset amount leftover after total liabilities are subtracted from total assets
Net Sales- Amount of sales made after discounts, damages, and return deductions are applied
Notes Payable- A note promising to pay a liability on or by a specific date
Notes Receivable- A promissory note written by a borrower representing a receivable asset
