Accounting glossary: the terms behind your books

In Iranian coding, the group is the top level of the chart, such as 1 Current assets or 3 Current liabilities. Groups only summarize; entries are posted to lower levels.

Accounts payable are amounts the business owes suppliers for goods or services received. They are current liabilities and are tracked per supplier.

Accounts receivable are amounts customers owe the business for goods or services already delivered. They are current assets and are tracked per customer.

Under the accrual basis, revenue is recorded when it is earned and expenses when they are incurred, whatever the date of payment. IFRS and US GAAP statements are prepared on this basis.

Accumulated depreciation is the total depreciation charged on an asset since it was acquired. Cost minus accumulated depreciation gives the asset's carrying amount.

An adjusting entry is recorded at the end of a period to bring balances up to date, for example accrued expenses, prepaid amounts or depreciation. It makes the statements follow the accrual basis.

An API key is a secret token that identifies a program calling an API. In Ledgeriano each key belongs to one business, has read or write abilities and can be rotated or revoked by the owner.

An audit trail is a chronological log of who created, changed, posted or reversed what and when. It lets auditors trace every number back to its origin.

The balance sheet shows what a business owns (assets), owes (liabilities) and the owners' residual interest (equity) on a specific date. Assets always equal liabilities plus equity.

The base currency is the currency a business keeps its books and reports in. Entries in other currencies are converted to it with an exchange rate.

The cash flow statement explains the change in cash during a period, split into operating, investing and financing activities. The indirect method starts from net profit and adjusts for non-cash items and changes in working capital.

A chart of accounts is the coded list of all accounts a business uses, organized as a hierarchy of assets, liabilities, equity, revenue and expenses. Ledgeriano ships six templates, from about 97 to about 248 accounts.

A closing entry brings revenue and expense accounts to zero at year end and moves the net result to equity. In Ledgeriano it runs through the income summary into retained earnings.

Consolidation combines the financial statements of a parent and its subsidiaries into one set, as if they were a single entity, after eliminating intercompany items.

A contra account carries a balance opposite to the account it belongs with, reducing it on the statements. Accumulated depreciation, for example, is a credit balance that reduces fixed assets.

A cost center is a department, branch or unit that expenses are assigned to, so management can see what each part of the business costs. It is tagged on entry lines rather than built into account codes.

A credit is an entry on the right side of an account. It increases liabilities, equity and revenue and decreases assets and expenses.

A debit is an entry on the left side of an account. It increases assets and expenses and decreases liabilities, equity and revenue.

A detail account breaks a subsidiary balance down by person, project or unit. In Ledgeriano, parties, cost centers and projects on each line play this role, so one subsidiary account can be analyzed many ways.

Double-entry bookkeeping records every transaction in at least two accounts, with total debits equal to total credits. Because both sides always balance, errors show up in the trial balance instead of hiding in the books.

A draft entry can still be edited or deleted and does not affect reports. Posting finalizes it: a posted entry counts in the ledger and is corrected only by a reversal entry.

An exchange rate is the price of one currency in another, used to convert a foreign-currency amount into the base currency on a given date.

A fiscal year is the accounting period, usually twelve months, for which a business prepares its annual statements. It does not have to match the calendar year, and in Iran it usually starts on 1 Farvardin.

A foreign exchange gain or loss arises when the rate changes between recording a foreign-currency item and settling or revaluing it. It is reported in profit or loss.

The general ledger is the complete set of accounts with every posted movement and its running balance. Financial statements are built from general ledger balances.

An idempotency key is a unique value sent with a request so that repeating the request has no extra effect. Retrying an entry creation with the same key returns the original entry instead of booking it twice.

IFRS (International Financial Reporting Standards) are accounting standards issued by the IASB and required or permitted in more than 140 jurisdictions. IAS 1 sets the structure of the primary financial statements.

IFRS for SMEs is a simplified, self-contained version of IFRS for private companies without public accountability, with fewer options and lighter disclosures.

The income statement reports revenue, expenses and the resulting profit or loss for a period. Presented by function, it shows revenue, cost of sales, gross profit, operating expenses and net profit.

The income summary is a temporary account used during closing. Revenue and expense balances are closed into it, and its balance, the year's profit or loss, is then transferred to retained earnings.

Intercompany elimination removes transactions and balances between group companies when preparing consolidated statements, so the group does not report sales or receivables to itself.

An intercompany transaction is a sale, loan, recharge or fee between two companies in the same group. It is recorded in both sets of books, for example as a sale by one company and a purchase by the other.

Iranian national accounting standards are issued by the Audit Organization of Iran and govern financial reporting of Iranian companies. Local practice uses group, ledger and subsidiary coding and lists current items first on the balance sheet.

The Jalali or Solar Hijri calendar is the official calendar of Iran. Its year starts at the March equinox on 1 Farvardin, which is why Iranian fiscal years usually run from 1 Farvardin to the end of Esfand.

The journal book lists all posted entries in date order with their lines. It is the chronological record, while the ledger groups the same lines by account.

A journal entry, also called a voucher, is the record of one transaction: a date, a description and two or more lines that debit and credit accounts by equal totals. In Ledgeriano every entry has a sequential number within its fiscal year.

The ledger (control) account is the second level of Iranian coding, such as 11 Cash and bank balances. Statements are usually presented at this level.

A lock date blocks new entries, edits and postings on or before a chosen day. It protects periods that have been reported, filed or audited.

Multi-entity accounting is keeping separate books for several related businesses, each with its own chart, currency and fiscal years, while managing them from one place. It is the base for intercompany automation and consolidation.

The normal balance is the side on which an account usually carries its balance: debit for assets and expenses, credit for liabilities, equity and revenue. A balance on the other side is a signal to check the account.

The opening entry starts a new fiscal year with the closing balances of assets, liabilities and equity from the previous year. Ledgeriano writes it automatically when a year is closed.

A party is a customer, supplier or other person the business deals with. Tagging entry lines with a party lets you see receivable and payable balances per counterparty.

Project accounting tracks revenue and costs per project or contract to measure its profitability. Tagging lines with a project gives a per-project result without separate accounts.

Retained earnings are the accumulated profits a business has kept rather than distributed to owners. Each year's profit or loss is added to them at closing.

A reversal entry cancels a posted entry by recording the same lines with debits and credits swapped. Both entries stay in the books and are linked, which keeps the audit trail complete.

The statement of changes in equity shows how share capital, reserves and retained earnings moved during the period, including profit, dividends and capital contributions.

The subsidiary account is the third level of Iranian coding, such as 1101 Cash on hand, and is where entries are usually posted.

A subsidiary ledger shows the detail behind a control account, such as each customer inside trade receivables. Its total must equal the control account balance in the general ledger.

A trial balance lists every account with its debit or credit balance to prove that total debits equal total credits. The 6-column version shows opening balance, period movement and closing balance for each account.

US GAAP (Generally Accepted Accounting Principles) is the accounting framework used in the United States, set mainly by the FASB through its Accounting Standards Codification.

VAT is a consumption tax charged at each stage of supply. Businesses collect output VAT on sales, recover input VAT on purchases and pay the difference to the tax authority.

A voucher type classifies journal entries by purpose, such as sales, purchases, payments or payroll, usually with a short code like SAL or PUR. It makes filtering, reporting and automation rules easier.

A webhook is an HTTP request a system sends to your URL when an event happens, such as entry.posted. Ledgeriano signs each delivery with HMAC SHA-256 so the receiver can verify it.

Working capital is current assets minus current liabilities. Changes in it, such as higher receivables or lower payables, are the main adjustments in an indirect cash flow statement.

Zakat is an Islamic levy on wealth that companies in Saudi Arabia and some other GCC countries account for and pay annually, usually based on a zakat base derived from the balance sheet.