It is important to understand the meanings of accounting terminology and basic accounting terms when reading financial reports or using accounting software. Some of the common accounting definition of terms are as follows:

Account: A record that holds the results of financial transactions related to the entity the account refers to.

Accountant's Equation: Assets = Liabilities + Owners' Equity

Accounting: The process of recording, managing, measuring, evaluating and reporting an entity’s financial information

Accounts Payable: Accounting definition of amounts that are due from your business to creditors in the short term

Accounts Receivable: Amounts that are due to your business from your customers, generally in the short term