Accounting & Budgeting Glossary

The following is a glossary of Accounting & Budgeting terms that are commonly used by HR professionals:

Accounting



The process of recording, classifying, summarizing, and reporting financial transactions



Accrual Accounting


An accounting method that records revenue and expenses when they are earned or incurred, not when cash is received or paid



Actuals


The real, recorded financial results, used to compare against the budget



Amortization


The gradual expensing of an intangible asset or the scheduled repayment of a loan over time



Assets


Resources owned by an organization that have economic value



Balance Sheet


A financial statement showing assets, liabilities, and equity at a specific point in time



Budget


A financial plan outlining expected revenues and expenses for a specific period



Budget Variance


The difference between budgeted amounts and actual results



Capital Budget


A budget for long-term investments such as buildings, equipment, or major technology



Capital Expenditure (CapEx)


Spending on assets that provide benefits over multiple years



Cash Flow


The movement of cash into and out of an organization



Chart of Accounts


A structured list of all accounts used to record financial transactions



Cost Center


A department or function for which costs are tracked but that does not directly generate revenue



Depreciation


The systematic allocation of the cost of a tangible asset over its useful life



Direct Costs


Costs that can be directly traced to a specific program, product, or department



Encumbrance


Funds set aside for committed but not yet paid expenses (common in government and higher education)



Equity


The residual interest in assets after liabilities are deducted



Expense


A cost incurred in the process of generating revenue or operating an organization



Fiscal Year (FY)


A 12-month accounting period used for budgeting and reporting purposes



Forecast


An estimate of future financial outcomes based on current trends and assumptions



General Ledger (GL)


The main accounting record that summarizes all financial transactions



Indirect Costs


Costs that support operations but cannot be easily assigned to a single activity



Liabilities

Obligations or debts owed by an organization



Operating Budget


A budget covering day-to-day expenses such as salaries, supplies, and utilities



Revenue


Income earned from normal business or operating activities



Variance Analysis


The process of reviewing and explaining differences between budgeted and actual amounts

For More Information About Accounting and Metrics For HR Professionals:

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