Bookkeeping Glossary

Pre-reconciliation, transaction anomaly, and duplicate detection terminology for solo bookkeepers and small firms.

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Accounts Payable (AP): A liability account tracking unpaid vendor invoices and obligations due within one year.
Accounts Receivable (AR): An asset account for amounts owed by customers; money expected to be collected from sales on credit.
Accrual Accounting: Records income and expenses when earned or incurred regardless of cash movement dates.
Adjusting Entry: A journal entry made at period-end to assign revenue or expense to the correct accounting period.
Anomaly Detection: The identification of data points or transaction patterns that deviate significantly from expected norms.
Audit Trail: A chronological record of transactions and entries used to verify the accuracy and completeness of financial data.

Bad Debt: An uncollectible amount owed by a customer, written off as an expense when recovery is deemed unlikely.
Bank Feed: Automated data pushed from a bank account to accounting software, providing real-time transaction records.
Bank Reconciliation: The process of matching internal cash account records against the bank's statement to identify discrepancies.

Cash Accounting: Records income when cash is received and expenses when cash is paid out.
Chart of Accounts (COA): A structured list of all accounts used by a business to classify financial transactions.
Cleared Transactions: Bank transactions that have been matched to corresponding entries in the accounting records.
Contra Account: An account paired with a related primary account to reduce its net balance; e.g., accumulated depreciation.
Cost of Goods Sold (COGS): The direct cost of producing goods sold by a business, including materials and direct labor.
Credit Entry: A journal entry that increases a liability or equity account, or decreases an asset or expense account.

Debit Entry: A journal entry that increases an asset or expense account, or decreases a liability or equity account.
Depreciation: The systematic allocation of a fixed asset's cost over its useful life; a non-cash expense.
Double-Entry Accounting: A method where every transaction affects at least two accounts with equal debits and credits.
Duplicate Transaction: An entry recorded more than once for the same source document or bank event, creating an overstated balance.

FIFO / LIFO: First-in, first-out (FIFO) and last-in, first-out (LIFO) are inventory costing methods affect COGS.

General Ledger (GL): The core financial record of all accounts and transactions that forms the basis of financial statements.
Gross Profit: Revenue minus cost of goods sold; indicates the efficiency of production or service delivery.

Invoice Matching: The verification process of comparing a purchase or sales invoice against related purchase orders and receiving records.

Journal Entry: A recorded transaction in chronological order, showing the accounts and amounts debited and credited.

Matching Principle: An accounting concept requiring expenses be recorded in the same period as the revenues they helped generate.
Misclassified Transaction: A transaction posted to an incorrect account or category, distorting financial statement accuracy.

Opening Balance: The amount that appears as the beginning balance in an account at the start of a new accounting period.

Pre-Reconciliation: A preliminary scan of raw transactions to flag anomalies, duplicates, and mismatches before formal reconciliation begins.

Reconciliation: The process of verifying that two sets of financial records agree and identifying the causes of any differences.
Reversal Entry: An correcting journal entry that reverses a previously posted entry; used to fix errors or end temporary accounts.

Source Document: The original record of a transaction—such as an invoice, receipt, or bank statement—used to support journal entries.
Suspense Account: A temporary holding account used to post transactions that cannot be immediately classified; resolved during review.

Trial Balance: A report listing all general ledger account balances to verify that total debits equal total credits.

Voided Transaction: A transaction that has been nullified after initial recording, often appearing in bank records as a zero-amount entry.

Write-Off: The removal of an uncollectible account or an asset whose value has been entirely depreciated from the books.