---
title: Vocabulary
summary: The 12 accounting words a business owner trips over when they open Yoke Ledger, defined in plain English.
order: 6
---

# Vocabulary

These are the words that show up in the GL surface that
will confuse you if you're not an accountant. Each entry
is one sentence of definition + one sentence on why it
matters to you.

## Debit / Credit

A bookkeeping convention for which side of an entry money
moves to. *Why it matters:* you don't need to remember
which is which — Yoke Ledger handles the sides when you
pick the right accounts. The terms come up when reading
GL reports.

## Accrual vs Cash

Two ways of recognizing revenue and expenses. Cash basis:
when money moves. Accrual basis: when the obligation
exists (you sent the invoice; the customer hasn't paid
yet). *Why it matters:* accrual gives you a clearer
picture of profit; cash is simpler. Most small businesses
use cash; growing businesses graduate to accrual.

## Asset / Liability / Equity / Revenue / Expense

The five account buckets. *Why it matters:* every
transaction touches at least two of these. See
[which account does this go to?](/docs/accounting/for-business-owners/categorize-a-transaction).

## Trial Balance

A snapshot listing every account and its balance as of a
date. *Why it matters:* if the debits and credits don't
match, the books are broken. First thing your CPA will
check.

## General Ledger

The full record — every transaction, every debit, every
credit. *Why it matters:* it's the receipts for the Trial
Balance. Auditors and CPAs ask for it.

## Journal Entry

A single bookkeeping record — one transaction, debit one
account, credit another (or several), totals match.
*Why it matters:* this is the atomic unit of your books.

## Posting Rule

A template that creates journal entries automatically
when a business event happens (sale, invoice, payment
received). *Why it matters:* set them up once and your
books update without you typing anything.

## Chart of Accounts

The list of every account your business uses. *Why it
matters:* you customize this to match how you think about
your business. Bad CoA = bad reports.

## AR / AP

Accounts Receivable (money customers owe you) and
Accounts Payable (money you owe vendors). *Why it
matters:* watching AR tells you who's slow to pay; AP
tells you what's due.

## COGS

Cost of Goods Sold. *Why it matters:* on your P&L, this
is what it cost you to deliver what you sold. Revenue
minus COGS is your margin.

## Net Income vs Cash Flow

Profit is what you earned. Cash flow is what hit your
bank account. *Why it matters:* you can be profitable and
running out of cash (slow-paying customers), or
unprofitable and cash-rich (loan came in). Watch both.

## Reconciliation

Confirming your books and your bank statement agree.
*Why it matters:* if they don't agree, your books are
wrong. See [month-end checklist](/docs/accounting/for-business-owners/month-end-checklist).