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Glossary of Finance Software Terms
Explanations of Finance Software Terms
Glossary
We've come across a few terms in finance software that might need quick explanations and provide these in our glossary below.
| Accounts Receivables | A record of money that is owed or paid to a business; includes customer transactions such as invoices, payments, deposits of payments, refunds, credit memos, and statements. |
| Accounts Payable | A record of the money that a business owes to its creditors (outside contractors, vendors or suppliers) for purchasing goods and services. |
| AGI | Adjusted Gross Income - an amount used to calculate federal income tax. AGI is calculated by looking at gross income (income from taxable sources e.g. salary, interest, dividends) minus certain deductions (e.g. IRA contributions, business expenses, charitable cash donations). |
| Balance Sheet | A report summarizing the financial position of a business; shows the value of company's assets, liabilities, & equity. The value of assets always equal to the combined value of liabilities & equity. |
| Cash Basis Bookkeeping | A method of bookkeeping which records income or expenses only at the time you receive a payment or pay a bill. |
| Chart of Accounts | A list of a business' accounts and account balances. |
| CSV | Comma Separated Values. This is a common format used to exchange data between different applications such as financial software and spreadsheets & databases. |
| Direct Connect | A process which downloads transactions directly from a financial institution to certain finance software programs. |
| Discretionary Expense | Non essential expenses such as eating out or entertainment. |
| Double Entry Bookkeeping | In this accounting system there is both a debit and credit entry for each transaction recorded, leading to a set of balanced ledger credit and debit accounts. Helps reduce accounting errors and produces year end accounts more easily. |
| E-Filing | The process of submitting income tax returns to a tax authority electronically over the internet. |
| Fixed Asset | A long term business asset (such as property and equipment) used in a productive capacity that is expected to be in operation for longer than one year. |
| Fixed Expense | These expenses do not change or vary significanty from time to time, e.g. rent, internet access, insurance premiums. |
| Gross Amount | An amount of money before any deductions. |
| Merchant Account | Required by all businesses needing to process online card payments. |
| Net Worth | The value of all assets minus all liabilities. |
| QIF | Quicken Interchange Format. Used to import data from financial institutions to finance software programs. |
| TXF | Tax Exchange Format. The accepted standard for saving tax data in financial software. |
| Variable Expense | Expenses which vary significantly from one period to the next, (e.g. clothing, car & household maintenance, office supplies). |
| Web Connect | Method of downloading transactions from a financial institution to a computer. Users must then import downloaded data into finance software. |
| What-If Scenarios | Possible financial outcomes derived by computer calculations analyzing various factors, e.g. re-financing home, lower salary, saving for college. |
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