Accounts Payable (AP): Money your business owes to vendors, contractors, or suppliers. It's what you need to pay. This is not 1099 contractors.

Accounts Receivable (AR): Money customers owe to your business for goods or services. It's what you’re waiting to get paid.

Assets: Resources the business owns that have value (e.g., cash, equipment, accounts receivable)

Bill: A vendor invoice received by your business for products or services purchased. Creates Accounts Payable until paid. 

Bill Payment: The transaction used to pay a bill that has already been entered into QuickBooks. A Bill Payment reduces Accounts Payable and should not be confused with entering an expense directly from the bank feed.

Chart of Accounts: The master list of all categories used to track income, expenses, assets, liabilities, and equity. Everything in QuickBooks lands in one of these buckets. The backbone of your financial system.

Equity: The owner’s claim on the business assets after liabilities are subtracted; also called net worth.

Expenses: Costs incurred to run the business (e.g., rent, wages, supplies).

Invoice: A request for payment sent to a customer for goods or services provided. An invoice creates Accounts Receivable until the customer pays it. 

Journal Entry (JE): A manual entry used to adjust or correct accounting records, often used in cleanups or when importing old data.

Liabilities: Debts or obligations owed by the business (e.g., loans, accounts payable.)

Opening Balance Equity: A temporary QuickBooks account often created when opening balances are entered incorrectly. A balance remaining in this account usually deserves investigation. 

Owner’s Contribution: Money put into the business by the owner of a sole proprietorship or single-member LLC. Increases owner’s equity.                                     🚫 Not for S Corps. 👉 Do not use this for S Corps - S Corps should use Shareholder Contributions.

Owner's Draw: Money taken out of the business by the owner of a sole proprietorship or single-member LLC for personal use. This reduces the owner’s equity. 🚫 Not for S Corps. 👉 Do not use this for S Corps — S Corps should use Shareholder Distributions instead.

Payroll Liabilities (FUTA/SUTA): Federal and State Unemployment Taxes. If you have employees, these are part of your payroll tax obligations. These are also payroll liabilities.

Statement of Owner’s Equity: Often left out but helpful for understanding how retained earnings and capital contributions affect the business.

Suspense Account: A temporary holding account used when the proper classification of a transaction is unknown. Should generally be cleared once the correct account is identified. 

Transfer: Movement of money between two accounts owned by the same business (e.g., checking to savings). Transfers are not income or expenses. 

Accrual Basis Accounting: An accounting method where income and expenses are recorded when they’re earned or incurred, not when cash changes hands.

Accruals: Revenues or expenses recorded before the actual cash changes hands. Common for utilities, wages, or services received but not yet invoiced. Used in Accrual Basis Accounting.

Auto-Reversing Accruals: Temporary entries posted to record expenses or revenue in the correct period; they reverse automatically the next period to prevent duplicates. Used in Accrual Basis Accounting.

Balance Sheet: A financial statement showing your company’s assets, liabilities, and equity at a specific point in time. Think of it as a snapshot of financial position.

Cash Basis Accounting: A simpler method where transactions are only recorded when money actually moves in or out.

Cash Flow: The movement of money in and out of the business; shows liquidity.

Cash vs Accrual Reporting Toggle: QBO lets you flip reports between the two. But just because you can doesn’t mean the books are correct for both methods. Understand the differences.

Cost of Goods Sold (CoGS): The direct costs associated with producing or purchasing products sold to customers. Common examples include materials, subcontractors, and direct labor. 

Cost of Services (CoS): Direct costs associated with providing services to customers. Similar to Cost of Goods Sold (COGS), but used by service-based businesses that do not sell physical inventory. Example: subcontractors, direct labor, specialized consulting expenses, or project-specific materials.

General Ledger (GL): The complete record of your company’s financial transactions, organized by account. Also known as Registers.

Other Expense: Not part of normal operations. Costs not part of normal operations (e.g., penalties, one-time losses, interest paid, losses from asset sales, other unusual expenses)

Other Income: Not part of normal operations. Income not from main business operations (e.g., interest, refunds, gains on an asset sales, etc.).

Prepaid Expenses: Payments made for future goods/services (like insurance). Booked as an asset and amortized monthly - usually missed. Often used in Accrual based businesses.

Profit and Loss (P&L): A financial report that shows income, expenses, and net profit or loss over a given period. Also called the “income statement.”

Profit Margin: The percentage of revenue remaining after expenses are deducted. A key measure of business profitability and financial health. 

Retained Earnings: Profits have been reinvested in the business instead of paid out. On the Trial Balance, a Credit balance means Profits, whereas a Debit balance means loss.

Revenue: Income earned from normal business operations (e.g., sales, services).

Statement of Cash Flows: A financial report showing cash inflows and outflows over time.

Statement of Financial Position: Another term for Balance Sheet; shows assets, liabilities, and equity at a point in time.

Trial Balance: An internal report listing all accounts and their balances at a point in time. Used to check that debits=credits before preparing final reports. Internal use only. Often reviewed before external reports like the P&L or Balance Sheet.

Bank Deposits (QBO): A QBO feature that lets you group and record multiple payments into one deposit, matching your actual bank activity. Keeps your books in sync with your bank.

Bank Feed: A live connection between your bank annd QuickBooks that imports transactions automatically to save you time and typos. True life saver for many businesses.

Bank Reconciliation: The process of verifying QuickBooks balances against actual bank statements to ensure accuracy.

Cleared vs Reconciled: “Cleared” = QBO saw it in bank feed. “Reconciled” = You verified it matches your bank statement. One’s automated; the other’s deliberate.

Deposits: Funds received from customers before an invoice is issued; often tracked as a liability until the sale is complete. This is the action.

Matching (Bank Feed): Tells QBO that a bank transaction corresponds to a transaction already in QBO. Skipping this leads to duplicates and chaos.

Non-Sufficient Funds (NSF): Occurs when a customer payment is returned by the bank due to insufficient funds. Requires correction of the original payment and related accounting record 

Outstanding Check: A check that has been recorded in QuickBooks but has not yet cleared the bank account. Outstanding checks commonly appear as reconciling items during bank reconciliations until they clear the bank. 

Outstanding Deposit: A deposit recorded in QuickBooks that has not yet appeared on the bank statement. Common reconciling item during bank reconciliations. 

Reconciliation: The process of comparing internal records (like QuickBooks) with external sources (like bank statements) to ensure everything matches, nothing is missing, and is accurate.

Undeposited Funds: Also known as "Payments to deposit".  A temporary "bank-in-transit" account for batching customer payments before depositing. Confuses people constantly.

Credit Memo: A document used to reduce or reverse part of a customer's invoice. Commonly used for refunds, discounts, returned products, or billing corrections. 

Customer Deposits: Money received from a customer before work is completed or products are delivered. Usually recorded as a liability until earned. Often confused with income. 

Customer Payments: Payments made by customers to settle open invoices; tied to specific sales transactions.

Deferred Revenue: Money received in advance that hasn’t yet been earned. Recorded as a liability until services are delivered. This is the label of Deposits.

Sales Receipt: Used when a customer pays at the same time goods or services are provided. Unlike an invoice, there is no Accounts Receivable because payment is received immediately.

1099 Contractor: An independent worker who is not on payroll. You’re required to issue them a 1099 form if you paid $600+ in a year. See W2 Employee for further details.

Auto File (QBO): QuickBooks Online feature that automatically files payroll taxes. Saves times and avoids deadline panic, greying hair, or loss of hair. :)

Employer Taxes vs Employee Taxes: Employee taxes are withheld from employee paychecks. Employer taxes are paid by the business in addition to employee wages. Both create payroll liabilities. 

Gross Pay vs Net Pay: Gross Pay = before taxes/deductions. Net Pay = what the employee actually receives.

Overtime (OT): Hours worked beyond standard thresholds requiring premium pay under labor laws (commonly over 40 hours/week in the U.S.).

Payroll Liabilities: Taxes and withholdings your business owes to the government (like Social Security, Medicare, or state unemployment).

Payroll Reconciliation: The process of comparing payroll reports, tax filings, liabilities, and financial statements to ensure payroll accuracy.

Payroll Tax Deposit: A payment sent to a tax agency for payroll taxes withheld from employees and employer payroll taxes owed by the business. 

Per Diem: A daily allowance paid to employees for travel-related expenses such as meals and incidental costs. Tax treatment depends on IRS rules and documentation. 

Schedule B Filer: An employer required to report payroll tax liability by deposit date on Form 941 Schedule B. Common for businesses with frequent payroll tax deposits. 

SUI Rate: State Unemployment Insurance tax rate assigned to employers. Rates can change yearly and directly impact payroll liabilities. Also known as SUTA, for State Unemployment Tax Act. Not to be confused with FUTA.

Straight Time (ST): Hours worked within standard thresholds requiring premium pay under labor laws (commonly up to 40 hours/week in the U.S.).

W2 Employee: Employees have payroll taxes paid and withheld accordingly. Worker classification determining payroll tax treatment, labor protections, and reporting requirements. See 1099 Contractor for further details.

Worker's Compensation Insurance: Insurance that helps cover employee medical expenses and lost wages for work-related injuries or illnesses. Often required by state law. 

Average Cost: An inventory costing method that calculates the average cost of all inventory units on hand and uses that average cost when inventory is sold. Helps smooth out fluctuations in inventory purchase prices. See FIFO and LIFO for other common costing methods.

Bill of Materials (BOM): A structured list of components, quantities, and materials required to build a finished product or assembly. Common in manufacturing and inventory assembly workflows.

FIFO (First In, First Out): Inventory costing method assuming oldest inventory is sold first. Used by QuickBooks Online inventory. See Average Cost and LIFO for other common costing methods.

Inventory: Goods or materials a business holds for resale or production. Needs proper tracking to avoid financial black holes.

Inventory Assembly: A finished inventory item created from multiple inventory parts or subassemblies. Used heavily in QuickBooks Desktop manufacturing-style workflows.

LIFO ((Last In, First Out): An inventory costing method that assumes the newest inventory purchased is sold first. While commonly discussed in accounting, LIFO is generally not supported in QuickBooks Online inventory and is less commonly used today. See Average Cost and FIFO for other common costing methods.

Negative Inventory: Occurs when more inventory is sold than is recorded as available. Often indicates timing issues, missing inventory purchases, or inaccurate inventory tracking. 

Reorder Point: The minimum inventory quantity that triggers a restock or purchasing decision.

Serialized Inventory: Inventory tracking method where each item has a unique serial number for warranty, repair, or traceability purposes.

Subassemblies: Assemblies used as components within larger assemblies. Common in manufacturing and advanced inventory workflows.

Work In Progress (WIP): Inventory or labor costs tied to partially completed projects or products not yet ready for sale.

Billable Time: Time tracked in QBO that can be billed to a customer. Often confused with regular time entries. Only available in Plus and Advanced.

Class Tracking: A way to categorize transactions by department, location, or function. Optional in Plus and Advanced. (Often confused with "Location Tracking.")

Change Order: A modification to the scope, price, timeline, or specifications of a project after work has begun. Common in construction and project-based industries.

Job Costing: The process of tracking income and expenses by project, customer, or job to determine profitability and monitor project performance. 

Location Tracking: Lets you assign transactions to different company locations or profit centers. Great for multi-unit businesses or service areas. Optional in Plus or Advanced.

Markup: The amount added to the cost of a product or service when determining the selling price. Used to generate profit on goods or services sold. 

Projects (QBO): A feature in QuickBooks Online that lets you track income, expenses, and time specific to a client job or project. Requires Advanced plans.

Accumulated Depreciation: The total depreciation recorded for a fixed asset since it was placed in service; reduces the asset’s book value over time. This goes hand in hand with Depreciation and Fixed Assets.

Bonus Depreciation: A tax method that allows businesses to accelerate depreciation deductions on qualifying fixed assets. Rules and percentages can change based on tax law. 

Capital Expenditure (CapEx): A significant purchase of equipment, vehicles, buildings, or other long-term assets that provide value over multiple years. Usually recorded as a Fixed Asset rather than an expense. 

Depreciation: A method of spreading out the cost of a big-ticket item (like a company vehicle or computer) over its useful expected life, rather than expensing it all at once. Company policy should be in place.

Fixed Assets: Big-ticket items your business owns and uses long-term (e.g., machinery vehicles, computers). These don’t get fully expensed right away.

Section 179 Deduction: A tax election that allows eligible businesses to expense qualifying fixed assets immediately rather than depreciating them over several years. Consult your tax professional for eligibility. 

Intercompany Transactions: Transfers or sales between two related entities. Often posted incorrectly, especially without due diligence. Requires special accounts setup by an advanced bookkeeper/accountant/CPA, and training for users to utilize properly.

Accountant's Copy (QBDT): A QuickBooks Desktop feature that allows an accountant to make certain changes while the client continues working in the company file. 

Audit Log (QBO): QBO’s built-in activity tracker. Great for seeing who did what, especially when things get funky.

Closing Date: A QuickBooks feature that locks prior accounting periods to help prevent accidental changes to finalized financial records. 

Custom Fields: User-defined fields added to customers, vendors, transactions, or items to track information not included in standard QuickBooks fields. 

Non-Posting Transactions: Transactions like estimates or purchase orders that don’t affect books until converted to invoices/bills. Super misunderstood.

Recurring Transactions: Automated templates for things like monthly invoices, bills, or journal entries. Great for consistency, but dangerous if not reviewed regularly.

Retained Earnings Lockdown: QBO rolls Net Income into Retained Earnings at fiscal year-end. You can't edit this account (for good reason) - and it confuses everyone.

User Permissions: Settings that control what areas of QuickBooks each user can access, view, edit, or delete. 

Void vs Delete: Voiding keeps an audit trail, deleting erases all trace. When in doubt? Void. Always better for audit integrity.

Duplicate Payroll: Payroll transactions recorded more than once, causing wages, taxes, liabilities, and expenses to be overstated. Common during payroll system conversions or imports. 

Duplicate Transactions: Multiple entries accidentally recorded for the same transaction, often caused by bank feed errors, manual imports, or syncing issues.

Forensic Cleanup: Deep-dive bookkeeping to fix messy, missing, or miscategorized data. Think “CSI: Accounting.”

Historical Cleanup: Reviewing and correcting prior-period bookkeeping errors, missing transactions, duplicate entries, and reconciliation issues.

Negative Accounts: When account balances go opposite of their expected normal (e.g., assets showing a credit, liabilities showing a debit). Not always an error - but always worth investigating. Important to note explanations.

Negative Undeposited Funds: Usually indicates customer payments, deposits, or bank transactions were recorded incorrectly. Often a sign of duplicate or missing entries. 

Opening Balance: Used when creating new accounts/customers/vendors to reflect the balance as of the starting date. Should be used sparingly and with understanding.

Unapplied Cash Bill Payment Expense: Appears when you've paid a vendor but haven't entered the matching bill. It shows as an expense even if there's no bill tied to it. Common mistake: Paying bills directly from the bank feed without entering the bill first.

Unapplied Cash Payment Income: A customer payment not matched to an invoice. Creates inaccurate A/R and messes up cash-basis reports. Review these during reconciliations!

Uncategorized Asset: Default account QBO uses when a transaction (usually from the bank feed) doesn't have an assigned category. Needs review to reclass accordingly.

Uncategorized Expense: Catch-all for money out when no expense category is selected. Review regularly - especially before monthly reports go out!

Uncategorized Income: Where QuickBooks throws incoming money it doesn’t know what to do with. Always review and reclass to a proper income category.

Workflow Stabilization: The process of organizing and standardizing operational accounting procedures to reduce errors, inconsistencies, and bottlenecks.