Glossary of Accounting and Reporting Terms

This glossary defines common accounting and reporting terms used in QuickBooks Online to help you manage your books.

Chart of Accounts Types

Income Money earned from the normal sale of your products or services. You might have one income account or several, depending on the level of detail you need for your financial analysis.

Other Income Income generated from activities that are not central to your normal business operations. Examples include interest earned, gains from the sale of assets, or miscellaneous income.

Expense Accounts used to track and categorize what your company spends. These are costs incurred to operate the business, such as rent, utilities, and advertising.

Cost of Goods Sold (COGS) Costs directly related to producing a service or good for sale. There is a direct relationship between these costs and your revenue. If you sell a product, COGS includes the material, labor, and other costs incurred to make and sell that product. By contrast, general office expenses (like rent or utilities) are considered indirect costs and should not be posted to COGS.

Balance Sheet Accounts These accounts track the financial health of your business at a specific point in time. They include:

• Assets: What your company owns (e.g., cash, accounts receivable, inventory).
• Liabilities: What your company owes (e.g., loans, accounts payable, credit cards).
• Equity: The owner’s investment in the company plus retained earnings minus draws.

Common Reporting Terms

Accrual Basis A method of accounting that records income and expenses when they are earned or incurred, regardless of when money actually changes hands. This is the default method for most businesses in QuickBooks Online.

Cash Basis A method of accounting that records income and expenses only when money is actually received or paid out.

Accounts Receivable (A/R) Money owed to your business by customers for products or services delivered but not yet paid for.

Accounts Payable (A/P) Money your business owes to vendors or suppliers for purchases made on credit.

General Ledger The master record of all your financial transactions. Every transaction in QuickBooks Online posts to at least two accounts in the General Ledger (Double-Entry Accounting).

Journal Entry A manual record of a transaction posted directly to the General Ledger. These are typically used for adjustments or depreciation that do not involve standard forms like invoices or bills.