Some Examples of Accounting Terms You May Have heard About

Earnings are basically the monetary advantages of the operation of a company. In economic terminology earnings is the income on which corporate tax is payable. Generally for an accounting of more specific details of corporate operations various other technical terms are also used as EBITDA and EBIT. These terms stand for Excess funds from profits.

The earning statement is prepared in order to provide an overview of the financial health of the corporation. The income statement form includes all items that are not business related or material contained that will have a direct bearing on the results of operations for the company. All of the items of income that are recognized in the income statement are essentially reinvested in growth and other areas of the company. This would include any cash paid out for stock repurchases, property sold, paid payroll taxes and any other type of Capital expenditures.

The balance sheet is prepared in order to provide an accurate depiction of the current status of the company. The difference between the assets and liabilities reported on the balance sheet and the sales price is the company’s net worth. The company’s balance sheet will not include the costs of some of the revenue generating activities. The company may report General and administrative costs as well as rent, utility costs and depreciation on the Earnings statement. The difference between revenues reported on the income statement and expenses reported on the balance sheet is called Interest and other income (which is a component of earnings).