English for Accounting: 30 Key Terms to Unlock Financial Fluency
If you’re an accountant or bookkeeper, or planning to become one soon, you’re going to need some English for accounting.
In this post, you’ll learn 30 English terms for accounting with examples to show how these words are used in context.
Then, you can take a quiz to test your knowledge and identify the terms that need some extra review!
With this lesson in accounting terms, you’ll expand your business English vocabulary and boost your confidence in working with English speakers.
Contents
- English Terms for Accounting
-
- 1. Assets
- 2. Liabilities
- 3. Balance Sheet
- 4. Debit
- 5. Credit
- 6. Double Entry
- 7. Net
- 8. Gross
- 9. Profit
- 10. Revenue
- 11. Capital
- 12. Cash Flow
- 13. Payroll
- 14. Accounts Payable
- 15. Accounts Receivable
- 16. Appreciation
- 17. Depreciation
- 18. Overhead
- 19. Accounting Period
- 20. Financial Statements
- 21. Share
- 22. Shareholder
- 23. Owner’s Equity
- 24. Auditor
- 25. Bookkeeper
- 26. Chartered Accountant
- 27. Creative Accounting
- 28. Income Tax
- 29. Value Added Tax (VAT)
- 30. Return on Investment (ROI)
- Quiz on English Accounting Terms
- Courses on English for Accounting
Download: This blog post is available as a convenient and portable PDF that you can take anywhere. Click here to get a copy. (Download)
English Terms for Accounting
1. Assets
Definition: Everything a company owns, including cash, accounts receivable (money a company is going to receive, see below), property and goods.
Example:
2. Liabilities
Definition: Everything that a company owes to others, like loans and mortgages.
Example:
3. Balance Sheet
Definition: A document that records a company’s assets and liabilities at a certain moment in time. If we’re talking about a public company, it also shows the shareholders’ equity (how much the shareholders own).
The balance sheet is based on the accounting equation:
assets = liabilities + owner’s equity
The balance sheet is important for potential investors because they can see how the company is doing.
Example:
4. Debit
Definition: An entry that shows what a company spends. Debits are recorded on the left side of an account.
Example:
She recorded the purchase of the new laptops as a debit entry.
5. Credit
Definition: An entry that shows how much money a company receives. Credits are recorded on the right side of accounts.
Example:
6. Double Entry
Definition: An accounting system in which each transaction is recorded as both a credit and a debit, an asset and a liability.
Example:
7. Net
Definition: An amount of money that is left after taxes have been paid.
Example:
8. Gross
Definition: An amount of money before taxes are deducted.
Example:
9. Profit
Definition: The money a business is left with after deducting all the expenses.
Example:
10. Revenue
Definition: The total amount of money a company receives from the services or products it sells. The revenue is higher than the profit, because in order to calculate the profit, you need to first see the costs of doing business.
Example:
Our company has experienced a decrease in revenue due to the financial crisis.
11. Capital
Definition: Cash and funds, but also machinery and tangible assets that can contribute to earning more money, like computers, company vehicles, etc. Intangible assets like expertise or reputation are not considered to be capital.
Example:
12. Cash Flow
Definition: Money coming in (inflows) and going out (outflows) of a company.
Example:
13. Payroll
Definition: A list of all a company’s employees and their salaries. The word payroll also refers to the total amount of money paid by a company to its employees.
Example:
14. Accounts Payable
Definition: Money that a company owes to other parties—companies or people—called creditors. Accounts payable are considered liabilities.
Example:
All of the accounts payable need to be cleared before we can invest in new software.
15. Accounts Receivable
Definition: Money that a company has to receive for products or services bought by customers or clients.
Example:
You can calculate the accounts receivable by adding up all the invoices the company generated.
16. Appreciation
Definition: The increase in the value of a company’s assets. Appreciation can be the result of an increase in demand for a product or service. The verb form is to appreciate.
Example:
17. Depreciation
Definition: The decrease in the value of products or services a company offers. Depreciation can be due to a high supply of similar products or services offered by competitors. The verb form is to depreciate.
Example:
18. Overhead
Definition: All the expenses a company needs to pay for, like the costs of advertising, labor, bills and taxes.
Example:
19. Accounting Period
Definition: The time period over which financial statements are produced, usually a year.
Example:
20. Financial Statements
Definition: Documents that show the financial situation of a company. They include the balance sheet (showing assets, liabilities and shareholders’ equity, see above), the income statement (showing revenues and expenses) and statement of cash flows (showing cash flow fluctuations in a certain accounting period).
Example:
21. Share
Definition: A unit of ownership in a company. The person or organization who owns shares (the shareholder, see below) is entitled to dividends (usually cash), but they also share the responsibility if there are losses.
Example:
22. Shareholder
Definition: A person or organization (company or any other institution) that owns shares in a company. Shareholders are, in a way, the owners of a company. If the company is doing well, the value of the shares goes up. If, on the contrary, the company is not profitable, the value of its shares decreases.
Example:
23. Owner’s Equity
Definition: A part of a company’s assets that the owner has. It’s calculated as assets minus liabilities.
Example:
24. Auditor
Definition: A person whose job is to evaluate accounting records in order to make sure they have been done properly and to check if the company is being run efficiently.
Example:
25. Bookkeeper
Definition: A person whose job is to record daily transactions, issue invoices and complete payrolls. Bookkeepers are usually supervised by accountants. Bookkeepers are required to have less experience than accountants and don’t need a degree in accounting.
Example:
26. Chartered Accountant
Definition: An accountant who has a certain amount of experience and who has passed certain exams that qualify them to be a member of an institution, such as the Institute of Chartered Accountants in the UK. In the US a similar title is that of Certified Public Accountant (CPA).
Example:
27. Creative Accounting
Definition: An accounting practice that tries to present an improved image of a company’s financial situation by highlighting mainly the aspects that are favorable. Creative accounting is considered to be legal, but is often seen as unethical.
Example:
28. Income Tax
Definition: Money that individuals and companies owe to the government, based on the income they make.
Example:
She was a sole proprietor and she hired an accountant to file her income tax return every year.
29. Value Added Tax (VAT)
Definition: A tax that consumers pay on most products and services, except most food and drugs. Not all countries have a VAT system. In the US, most states have something similar, called a sales tax.
Example:
The bookkeeper had to calculate the Value Added Tax in order to issue the invoice.
30. Return on Investment (ROI)
Definition: The profitability ratio of a certain investment. The return on investment is calculated as the benefit gained from the investment divided by the cost of the investment.
Example:
Quiz on English Accounting Terms
Look at the following sentences and choose the correct answer to test your understanding of the terms you just learned.
Courses on English for Accounting
To learn more English for accounting, check out one of these highly-rated courses:
- English4Accounting: This is a great resource because it offers a variety of activities to practice accounting vocabulary in context: reading exercises, multiple choice questions, listening comprehension exercises, spelling and recognition questions and teacher-graded speaking and writing activities.
- Mastering English for Accounting: Grammar Rules and Examples on Udemy.com: This course will teach you how to use various English verb tenses and grammar rules with an accounting context. It’s for intermediate English learners with previous knowledge of accounting.
- Tax & Accounting English Masterclass on Udemy.com: In this course, you’ll learn how to pronounce essential accounting terms, general tax terms, frequently used verbs in the accounting profession and more. It’s for students with a basic level of general English and previous knowledge of accounting and taxes.
- Virtual immersion programs like FluentU: While not specifically focused on accounting, this type of program can help with getting a grasp on the more general vocab that will surround more specialized words. With a huge collection of authentic videos in English, interactive subtitles and other learning tools, FluentU can help you improve your language skills and communicate more clearly in your accounting work and beyond.
Now that you’ve learned and practiced all these terms, the only thing left is to incorporate them into your speaking and writing!
With this new knowledge and some resources for additional learning, you’re well on your way to doing business in English with ease.
Download: This blog post is available as a convenient and portable PDF that you can take anywhere. Click here to get a copy. (Download)
