Accounting & GST Glossary
Your comprehensive guide to understanding accounting, bookkeeping, GST, and taxation terminology. Master essential financial concepts with our clear and concise definitions.
Categories
Accounting Basics
Accounting
Accounting is the systematic process of recording, classifying, summarizing, and interpreting financial transactions of a business. It provides crucial information for decision-making, compliance, and financial planning.
Bookkeeping
Bookkeeping is the day-to-day recording of financial transactions including purchases, sales, receipts, and payments. It forms the foundation of the accounting process.
Ledger
A ledger is a book or collection of accounts where all financial transactions are recorded and classified. It forms the basis for preparing financial statements.
Voucher
A voucher is a documentary evidence of a financial transaction. It supports the entries made in the books of accounts and includes payment, receipt, journal, and contra vouchers.
Debit and Credit
Debit and credit are the fundamental concepts in double-entry bookkeeping. Debit represents money going out or an asset increase, while credit represents money coming in or a liability increase.
Trial Balance
A trial balance is a statement that lists all ledger account balances at a specific date to verify that total debits equal total credits.
Taxation
GST (Goods and Services Tax)
GST is an indirect tax levied on the supply of goods and services in India. It replaced multiple indirect taxes and follows a destination-based taxation system with input tax credit mechanism.
GSTIN
Goods and Services Tax Identification Number (GSTIN) is a unique 15-digit identification number assigned to every GST-registered business in India.
Input Tax Credit (ITC)
ITC is the tax paid on purchases that can be claimed as credit against the GST liability on sales. It eliminates the cascading effect of taxes.
GST Returns
GSTR-1
GSTR-1 is a monthly/quarterly return that contains details of all outward supplies (sales) made by a registered taxpayer. It must be filed by the 11th of the following month.
GSTR-3B
GSTR-3B is a simplified summary return filed monthly by regular taxpayers. It includes details of outward supplies, input tax credit claimed, and tax payment.
GSTR-9
GSTR-9 is the annual return that consolidates all monthly/quarterly returns filed during the financial year. It must be filed by December 31st of the following year.
GST Compliance
E-way Bill
E-way bill is an electronic document required for movement of goods worth more than âš50,000 within or across states under GST law.
E-invoice
E-invoicing is a system where B2B invoices are electronically authenticated by GSTN. It's mandatory for businesses above specified turnover limits.
HSN Code
Harmonized System of Nomenclature (HSN) is a standardized system of naming and classifying products for GST purposes. Different digit lengths apply based on turnover.
SAC Code
Services Accounting Code (SAC) is used to classify services under GST, similar to HSN codes for goods.
Income Tax
ITR (Income Tax Return)
ITR is a form used to file information about income and taxes to the Income Tax Department. Different ITR forms (ITR-1 to ITR-7) are prescribed for different taxpayer categories.
TDS (Tax Deducted at Source)
TDS is a system where tax is collected at the source of income. The payer deducts tax before making payment and deposits it with the government on behalf of the payee.
PAN (Permanent Account Number)
PAN is a unique 10-character alphanumeric identifier issued by the Income Tax Department. It's mandatory for financial transactions above specified limits.
TAN (Tax Deduction Account Number)
TAN is a 10-digit alphanumeric number required for entities responsible for deducting or collecting tax on behalf of the government.
Financial Statements
Balance Sheet
A balance sheet is a financial statement that shows a company's assets, liabilities, and equity at a specific point in time. It follows the equation: Assets = Liabilities + Equity.
Profit & Loss Statement (P&L)
P&L statement shows a company's revenues, expenses, and profits over a period. It indicates the company's ability to generate profit by increasing revenue and reducing costs.
Cash Flow Statement
A cash flow statement tracks the inflow and outflow of cash in a business, categorized into operating, investing, and financing activities.
Accounting Concepts
Depreciation
Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. Common methods include straight-line and written down value.
Accounts Payable
Accounts payable represents money owed by a business to its suppliers or vendors for goods or services received but not yet paid for.
Accounts Receivable
Accounts receivable represents money owed to a business by its customers for goods or services delivered but not yet paid for.
Working Capital
Working capital is the difference between current assets and current liabilities. It measures a company's operational efficiency and short-term financial health.
Compliance & Audit
ROC (Registrar of Companies)
ROC is an office under the Ministry of Corporate Affairs that handles the administration of companies and Limited Liability Partnerships (LLPs) in India.
AOC-4
AOC-4 is an e-form used to file annual financial statements with the Registrar of Companies. It must be filed within 30 days of the Annual General Meeting.
MGT-7
MGT-7 is the annual return filed by companies with ROC containing details about the company's shareholding, directors, meetings, and other statutory information.
Audit
An audit is a systematic examination of financial records, statements, and operations to verify accuracy, compliance, and reliability of financial information.
Tax Audit
Tax audit under Section 44AB of Income Tax Act is mandatory for businesses with turnover exceeding prescribed limits. It ensures proper maintenance of books and tax compliance.
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