Banking Terminology

Account

A record of financial transaction in the form of stocks or flows is called an account. Basically it is a statement of indebted from one person to another.

Accounting

To provide a record such as funds paid or received for a person or business. Accounting summarizes and submits this information in reports and statements. The reports are intended both for the firm itself and for outside parties. Concise accounting helps management make accurate decisions.

Accounting Cycle / Book keeping Cycle

The name given to the collective processing the accounting events of a company. The series of steps begin when a transaction occurs and end with its inclusion in the financial statements. The accounting cycles are:

1. Collecting and analyzing data from transactions and events.

2. Putting transaction into the general journal.

3. Posting entries to the general ledger.

4. Preparing an adjusted trial balance.

5. Adjusting entries appropriately.

6. Preparing an adjusted trial balance.

7. Organizing the accounts into the financial statements.

8. Closing the book.

9. Preparing a post-closing trial balance to check the accounts.

The accounting cycle or bookkeeping cycle is a methodical set of rules to ensure the accuracy and conformity of financial statements. Computerized accounting systems have helped to greatly reduce mathematical errors in the accounting process but the uniform process of the accounting cycle also helps reduce mistakes.

Accounting event

A transition or changes recognized on the financial statements of an accounting entity is called accounting event. Accounting events can be either external or internal. An external transaction would occur with an outside party, such as the purchase or sales of a good. An internal transaction would involve changes in the accounting entity’s records, such as adjusting an account on the financial statements.

An accounting event is any financial event that would impact the account balances of a company’s...