Bookkeeping: The process of entering your bank transactions and credit card transactions into an accounting software to produce a set of “books.” These books tell you the amount of revenue that you have, where you are spending your money, and how much money you have left over.

Accounting: Accounting is the process of recording financial transactions (This includes Bookkeeping)pertaining to a business including receivables, prepaids, fixed assets, payables, loans and accruals. This process includes analyzing and reporting these transactions at a summary level that allows decision-makers to understand the business and allows reporting to stakeholders, oversight agencies, regulators and tax collectors.

Outsourced Accounting: An organization contracts with a third-party provider to record the organization’s financial transactions and analyze and report these transactions in a manner that allows decision-makers of the organization to understand the business and allows reporting to stakeholders, oversight agencies, regulators, and tax collectors.

Managerial Accounting: Accounting that is solely done for the purpose of providing information for management teams to assist in decision-making. This usually focuses on Key Performance Indicators which might be revenue per employee at a location or some other measurement of performance.

Financial Accounting: Accounting that focuses on providing information for external stakeholders of the organization. This type of reporting generally follows a set of standards known as Generally Accepted Accounting Principles (GAAP) and is summarized into a Balance Sheet, Income Statement and Cash Flow. An example of this may be audited financial reports that are requested by a bank or some other regulatory entity.

Method of Accounting –The Method of Accounting refers the methodology by which the books are kept. There is the cash basis which focuses on when the cash comes into the organization and when it leaves the organization. There is the accrual basis of accounting which focuses on when the money is actually earned through a service or by selling a product and when the expenses are actually incurred.

Balance Sheet: A balance sheet shows what an organization owns (assets), what it owes (liabilities), and what is left over (either equity for a for-profit organization or “net assets” for a nonprofit organization) at a certain date in time.

Income Statement: An income statement shows over a defined period of time the amount of money that was brought in for sales or services (revenue) and the amount of money that went out for expenses. What is left over is either net income (if revenue is more than expenses) or a loss (if expenses are more than revenue.)

Cash Flow Statement: A cash flow statement measures over a defined period of time the sources of cash and uses of cash.

Cash Flow Forecasting: A report that shows the expected sources and uses of cash over a future period of time and where the bank balance is expected to be at any certain point in the future. This type of report helps an organization to see where there may be cash surpluses or cash shortages and allows the organization to plan to optimize cash flow.

Budgeting: Budgeting is a process where the management projects the revenue and expenses over a certain period of time in order to determine how well the organization will do over that certain period of time. Typically, the actual results are compared to the budget over that period to determine how the organization is actually doing against the budget.

Forecasting: Forecasting is the process of projecting the revenue and expenses over a certain period of time in order to determine how well the organization will do over that certain period of time. Typically a forecast is a modification of an existing budget to project how well the organization will do against the budget. A forecast can include actuals for the early months of the year and budget or forecast for the months for which there are no actuals.

Key Performance Indicators: Key Performance Indicators (or KPI’s) are measurements that are important to the organization’s operations. These are typically measurements that are leading indicators to an organization’s performance. These KPI’s allow an organization’s stakeholders to see how the organization is doing without having to research the financial statements.

Fractional Chief Financial Officer (CFO): An experienced CFO who provides services for organizations in a part-time, retainer or contractual arrangement. This offers an organization the experience and expertise of high-end CFO without the in-house cost (salary, benefits, and bonuses).

Certified Public Accountant (CPA): A designation given to an accountant who has passed a standardized CPA exam and met state government-mandated work experience and education requirements to become a CPA.

Accounts Receivable: Accounts Receivable is the money owed by clients or customers to an organization after the goods or services have been delivered.

Accounts Payable: The amount of money an organization owes creditors in return for goods or services the creditor has provided.

Liabilities: An organization’s payables or debts that are outstanding due to the organization’s operations. Current liabilities are debts that are payable within a year. Long-term liabilities are debts that are payable over a period of time greater than a year.

Net Assets: Net Assets are what is left over for a non-profit after liabilities are deducted from the assets of the non-profit.

Equity: The amount left over which would go to the owners or shareholders if all the assets were liquidated and the debts were paid.