Let us familiarize some common accounting terms below:
Entity:
An Accounting entity is a well-described economic unit that segregates the accounting of
definite transactions from other divisions or accounting entities. From the accounting
perspective, an accounting entity might be an organizational structure that possesses
its own objectives, methods, and records.
Transactions:
The transaction can be considered a business activity that has an economic impact on an
organization’s financial statements. In this business activity, the money will be
exchanged upon purchase of product, sales, or any form of expense can be stated as a
transaction that will also affect the accounting records.
Capital:
In simple terms, we can describe capital as the economic resources invested by the
financiers in business that will be utilized for the fund operations. It can be used for
spending for daily operations and also for funding its future growth.
Stock:
Stock is a widely used concept for denoting the number of accessible products that are
stored in the shop or warehouse ready for sale or distribution.
Goods:
Goods are materialized, manufactured items with constant market demand.
Creditors:
The creditors or receivables can be defined as the individual or company who owe money
in a credit relationship. The creditor grants credit to the opposite party to take up
money, usually by a loan agreement or contract.
Debtors:
The debtors or payables are the persons or institutions that owe money to their
suppliers. This means a debtor is one who borrows money from a creditor.
Liabilities:
Liabilities are the debt of the company. The bank loans, unpaid bills, mortgages, and
any other types of money that the company has to pay. There are mainly two types of
liabilities, which are Current Liabilities and Non-Current Liabilities. Current
Liabilities are short-term liabilities. The unpaid bills, payroll taxes, accrued
expenses, loans, advances, etc. come under this category. The Non-Current Liabilities
are long-term liabilities which include long-term loans, long-term lease, deferred tax
liabilities, and other aspects.
Assets:
In terms of financial accounting, assets can be defined as any resource possessed by a
business or organization. It can be anything that has the potency to generate positive
economic value and is used in the long term. The asset can be classified as a Fixed
asset or the Current asset. Furniture, vehicles, land, machinery, buildings, and other
equipment comes under the fixed assets category. When we consider Current Assets, it has
a crucial role in business which refers to an organization’s short-term liquidity and
proficiency to pay its short-term liability. Also, it can be changed quickly. Examples
of Current assets are Cash, account receivable, stock inventory, prepaid liabilities,
cash equivalents, and many more.
Revenue/Income:
Revenue or income is the aggregate amount of income propagated from product selling or
providing services associated with the organization’s primary operations. In short, it
is the total earnings or profit of an organization. In accounting, the income
demonstrates at the top line of the income statement.
Expenses:
From an accounting perspective, expenses are the operational expenditures that are spent
to acquire business revenues. The expenses will be debited from the expense account.
Profit:
Profit is the financial gain, specifically, the difference between the amount gained and
the amount spent in procuring, running, or producing something.
Loss:
Loss is the financial expenses encountered by the entity at the time of its revenue
generation. The difference between income and expenses demonstrates profit and loss.
Equity:
Equity is the sum of money a proprietor puts into it or owns. The difference between the
liabilities and assets in the Company’s balance sheet reveals the actual amount of the
company equity.
Bookkeeping:
Equity is the sum of money a proprietor puts into it or owns. The difference between the
liabilities and assets in the Company’s balance sheet reveals the actual amount of the
company equity.
Stakeholders:
Stakeholders are the persons or groups with constant interest or concern in the entity.
We can consider an organization's employees as stakeholders who are interested in the
organization’s growth.
Shareholders:
Shareholders are who own a share in an organization. A shareholder will always be a
stakeholder, but the stakeholder may not be a shareholder.
Sales:
Sales can be referred to as the trade of goods and services for money.
Purchase:
Purchase can be considered as trade in which we buy goods or assets. Cash purchases or
credit purchases are possible.
Ledger:
Accounting Ledger is the account or record used to keep bookkeeping entries or
transaction entries for balance sheet and income statement transactions.
Journal:
Journals are the account that keeps all the details of the financial transactions of a
business. It can be utilized for the future reconciling of accounts and for the
information passing to other accounting records. The five types of journals used in Odoo
are sales, purchase, cash, bank, and miscellaneous.
Journal Entries:
Journal entry is a collection of business transaction records in a business's accounting
records. It includes the journal items with respect to the transaction comprising
reference number, accounting date, and the ledgers impacting the credit and debit side.
By pursuing the new and advanced features, the Odoo Accounting module became a more
reliant and comfortable tool for handling the financial management aspects of the
business.