Glossary
AI Finance Glossary
Plain-English definitions of AI, accounting, and SaaS-finance terms.
Categories
A
AI Bookkeeping
The application of artificial intelligence and machine learning to automate transaction categorization, reconciliation, and financial record-keeping.
API Integration in Finance
The use of APIs to connect financial systems, enable real-time data exchange, and automate workflows between accounting, banking, and fintech platforms.
Accounts Payable
Short-term liabilities representing amounts a business owes to suppliers and vendors for goods or services received but not yet paid.
Accounts Receivable
Amounts owed to a business by customers for goods or services delivered but not yet paid for.
Accrual Accounting
An accounting method that records revenues and expenses when earned or incurred, regardless of when cash changes hands.
Amortization
The systematic allocation of an intangible asset's cost or a loan's principal over a defined period.
Asset Turnover
A ratio measuring how efficiently a company generates revenue from its asset base.
Audit Trail
A chronological record of all user actions, system events, and data changes in a financial system, providing a traceable history for auditing and investigation.
B
Balance Sheet
A financial statement showing a company's assets, liabilities, and equity at a specific point in time.
Bank Reconciliation
The process of matching a company's internal cash records to its bank statement to identify and resolve discrepancies.
Bonus Depreciation
A tax incentive allowing businesses to immediately deduct a large percentage of the cost of eligible property in the year it is placed in service.
Break-Even Analysis
Calculation of the sales volume at which total revenue equals total costs, generating zero profit.
C
Cash Basis Accounting
An accounting method that records income and expenses only when cash is actually received or paid.
Chart of Accounts
A structured list of all financial accounts used by a business to categorize and record every transaction.
Continuous Accounting
An accounting model that distributes close activities throughout the period using automation and real-time data, reducing the month-end close crunch.
Contribution Margin
Revenue minus variable costs, showing how much each unit or sale contributes toward fixed costs and profit.
Current Ratio
A liquidity ratio measuring a company's ability to pay short-term obligations using current assets, calculated as current assets divided by current liabilities.
D
Days Payable Outstanding
The average number of days a company takes to pay its vendors, measuring how efficiently a company manages its accounts payable.
Days Sales Outstanding
The average number of days a company takes to collect payment after a sale, measuring accounts receivable collection efficiency.
Depreciation
The systematic allocation of a tangible asset's cost over its useful life, reducing its book value on the balance sheet each period.
Double-Entry Bookkeeping
An accounting system where every transaction is recorded as both a debit and a credit across at least two accounts, keeping the books balanced.
G
General Ledger
The master record of all financial transactions in a business, organized by account and used to produce financial statements.
Goodwill
An intangible asset representing the premium paid in an acquisition above the fair market value of the target's identifiable net assets.
I
Income Statement
A financial statement showing a company's revenues, expenses, and net profit or loss over a specific period.
Intangible Assets
Non-physical assets with economic value including patents, trademarks, copyrights, software, customer relationships, and brand names.
Internal Controls
The policies, procedures, and practices designed to safeguard assets, ensure financial accuracy, prevent fraud, and promote operational efficiency.
Inventory Turnover
A ratio measuring how many times a company sells and replenishes its inventory over a period, indicating inventory management efficiency.
N
O
OCR in Finance
Optical Character Recognition technology that extracts text from financial documents like invoices and receipts, automating data entry into accounting systems.
Operating Expenditure
Day-to-day expenses required to run a business, expensed immediately on the income statement.
P
R
Revenue Recognition
The accounting principle determining when and how much revenue can be recorded on the income statement under GAAP.
Robotic Process Automation
Software robots that automate repetitive, rule-based digital tasks in financial processes by mimicking human interaction with systems and applications.
S
Section 179 Deduction
Immediate expensing of qualifying business property rather than depreciating it over multiple years.
Segregation of Duties
An internal control principle requiring different people to handle different stages of a transaction to prevent fraud and errors.
T
T&E (Travel and Entertainment)
Employee spending on business travel, meals, and client entertainment, managed through expense reports and corporate policies.
Trial Balance
A report listing all general ledger account balances to verify that total debits equal total credits at a given date.