Glossary

Accounting Terms for Bitcoin Users

Why this glossary exists You know Bitcoin. Lightning, on-chain, sats, mempool, multisig. You're comfortable. Accounting throws around terms you may not have learned: debits and credits, accruals, retained earnings, double-entry. They're not hard, but they're worth defining. This glossary covers the core accounting terms in plain English, with a Bitcoin-user audience in mind. For the inverse glossary (Bitcoin terms for accountants), see Bitcoin Terms for Accountants. Accounts and ledgers Account. A category in your books. Examples: "Cash on Hand," "Sales: Coffee," "Software Subscriptions." Every transaction you record affects at least two accounts. Chart of Accounts (CoA). The master list of all accounts in your business. Like a folder structure for your money. Ledger. The complete record of all transactions. The General Ledger is the report that shows every transaction in every account. Journal. A chronological list of transactions. Less commonly viewed in modern software because the General Ledger replaces it for most uses. Journal entry. One specific transaction recorded in your books. Has at least one debit line and one credit line that must equal each other. Debits and credits Debit. One of the two sides of a journal entry. By convention, debits go on the left. Credit. The other side. Goes on the right. A common confusion: in everyday language, "credit" sometimes means "money in" (a credit to your account). In accounting, credit is one specific direction defined by the account type, not always "money in." The rules: | Account type | Goes up with | Goes down with | |---|---|---| | Asset | Debit | Credit | | Liability | Credit | Debit | | Equity | Credit | Debit | | Income | Credit | Debit | | Expense | Debit | Credit | So when a customer pays you in cash: - Your bank account (Asset) goes UP. Debit it. - Your Sales (Income) goes UP. Credit it. Both debit and credit are equal. That's the double-entry rule. In BitBooks Simple Mode, you don't see debits and credits; the system handles them. In Advanced Mode (Journal Entries), you write them yourself. Double-entry bookkeeping Double-entry bookkeeping. The 500-year-old standard accounting method. Every transaction has two sides (debit and credit). They must equal. This catches errors and produces self-checking books. It's why every accounting tool (BitBooks included) does this. Period and date concepts Accounting period. The time window your reports cover. Common periods: monthly, quarterly, yearly. Fiscal year. A 12-month accounting period that may or may not match the calendar year. Some businesses' fiscal year starts April 1, ends March 31. Year-to-date (YTD). From January 1 (or the fiscal year's start) through today. Period close (or month close, year close). The act of finalizing a period and locking it from further changes. See Period Close. The two main reports Profit and Loss (P&L). Also called Income Statement. Shows revenue and expenses for a period. Tells you whether you made money. See Profit & Loss Report. Balance Sheet. Shows assets, liabilities, and equity at a single point in time. Tells you what you own and owe. See Balance Sheet. Trial Balance. A health-check report. Lists all accounts with their balances; debits and credits should equal. See Trial Balance. Cash Flow Statement. Shows actual cash movement (separate from accrual profit). Tells you whether you have cash. See Cash Flow Statement. General Ledger. Every transaction in every account, the deepest detail. See General Ledger. Account categories Assets. Things you own. Cash, Bitcoin, equipment, accounts receivable. Liabilities. Things you owe. Bills not yet paid, loans, credit card balances. Equity. The owner's stake. Assets minus Liabilities. Includes original capital plus accumulated profits. Income (Revenue). Money coming in from sales or services. Expenses. Money going out for operations. The fundamental equation: Assets = Liabilities + Equity. Always balances. Special account types Accounts Receivable (AR). Money customers owe you (you've delivered, they haven't paid). An asset. Accounts Payable (AP). Money you owe vendors (you've received the bill, haven't paid yet). A liability. Retained Earnings. Accumulated profit that's stayed in the business (not paid out as dividends). An equity account. Owner's Capital (or Owner's Equity). Money the owners put into the business. An equity account. Cost of Goods Sold (COGS) / Cost of Sales. The direct cost of producing what you sold. An expense, but separated on the P&L from operating expenses. Operating Expenses. Day-to-day costs of running the business: rent, salaries, marketing. Depreciation. The accounting recognition that long-term assets lose value over time. Recorded as a periodic expense. Cash basis vs accrual Cash basis. Revenue is recognized when cash arrives. Expenses when cash leaves. Simple. Accrual basis. Revenue recognized when earned (regardless of when cash arrives). Expenses when incurred (regardless of when paid). More accurate but more complex. BitBooks uses accrual basis (the standard for most business accounting). If you sold a product on credit, it's revenue today even though the customer pays next month. Some flow terms Booking or posting an entry. Recording it in your books. After posting, it's part of the official record. Reconciling. Matching your books against an external source (bank statement, wallet provider) to verify they agree. See What is Bank Reconciliation?. Closing the books. Finalizing a period (typically year-end). Resets P&L accounts to zero, rolls profit into Retained Earnings, prepares for the next period. See Period Close. Reversing. Creating a counter-entry that cancels a previous entry. Used to fix Posted entries since they can't be edited or deleted directly. Audit and trust Audit trail. The history of who changed what, when, and how. BitBooks' Activity Log is the audit trail. Immutable / locked / posted. A transaction that can't be changed without explicit reversal. Once you mark something Posted, you can't just edit it. Adjusting entry. A journal entry made to correct or fine-tune the books, often at period-end. Closing entry. A journal entry made at year-end to roll P&L into Retained Earnings and reset. Tax-related Capital gains. Profit on selling an investment for more than you paid. For Bitcoin, this is the gain when you sell at a higher price than your cost basis. Cost basis. What you originally paid for an asset. Used to calculate gains and losses on sale. Realized vs unrealized. Realized = the gain or loss is "locked in" because you sold. Unrealized = on paper only because you still own. 1099. A US tax form for reporting payments to non-employees (independent contractors). For US businesses, you'd issue 1099s to vendors at year-end. FIFO / LIFO. First-In-First-Out / Last-In-First-Out. Methods for assigning cost basis when you sell some of a holding. Where to go next - Bitcoin Terms for Accountants for the inverse glossary - BitBooks Glossary (App-Specific Terms) for terms specific to this software - Account Types Explained for deeper explanations - Trial Balance for the books-health-check

Bitcoin Terms for Accountants

Why this glossary exists You know accounting. Debits, credits, accruals, GAAP, IFRS. You're comfortable. Bitcoin throws around terms that may be new: Lightning, sats, mempool, on-chain, hot wallet, cold storage. They're not hard, but they're worth defining clearly. This glossary covers the core Bitcoin terms in plain English, with an accountant audience in mind. For the inverse glossary, see Accounting Terms for Bitcoin Users. The basics Bitcoin (capital B). The Bitcoin network and protocol. bitcoin (lowercase b). A unit of currency on the Bitcoin network. Often abbreviated BTC. Satoshi (sat). The smallest unit of bitcoin. 1 BTC = 100,000,000 sats. Named after the pseudonymous creator. So 5,000 sats is 0.00005 BTC. Address. A string of letters and numbers that identifies a destination on the Bitcoin network. Like a bank account number, except you can have unlimited addresses for free, and they're publicly visible (but not directly tied to your identity). Transaction (TX). A record of bitcoin moving from one address to another, broadcast to the network and eventually written to the blockchain. Wallet. The tool you use to manage bitcoin. Holds the private keys (the secrets needed to spend) and tracks your addresses and balances. On-chain vs Lightning On-chain. Transactions that happen directly on the Bitcoin blockchain. They're the original Bitcoin transactions, settled in 10 minutes to an hour, irreversible after a few confirmations. Lightning Network (Lightning, LN). A second-layer network on top of Bitcoin. Transactions settle in seconds, costs near-zero fees. Used for everyday small payments (a coffee, a tip). Layer 1 / Layer 2. L1 is on-chain Bitcoin. L2 is Lightning (and other second-layer protocols). Both are "Bitcoin," but the settlement and fee characteristics differ. For accounting purposes, both are bitcoin. The same bookkeeping rules apply. Wallet types Custodial wallet. A third party (usually a company) holds the private keys for you. You log in to their service to manage your bitcoin. Examples: Coinbase, Blink. Like a bank holding your money. Self-custody wallet. You hold the private keys yourself. No third party can spend your bitcoin. Examples: hardware wallets, software wallets you control. Like cash in your home safe. Hot wallet. Connected to the internet. Used for daily transactions. Convenient but more exposed to attack. Cold storage / Cold wallet. Not connected to the internet. Used for long-term storage of larger amounts. Less convenient, more secure. Hardware wallet. A specific type of cold wallet: a physical device (Trezor, Ledger, Coldcard) that holds keys offline. For BitBooks, you record balances and transactions in each wallet regardless of type. The custody model affects security, not bookkeeping. Settlement and confirmations Confirmation. When a Bitcoin transaction is included in a block (a batch of transactions written to the blockchain). Each subsequent block adds another confirmation. 0 confirmations. Broadcast but not yet in a block. Could theoretically be replaced. 1 confirmation. In the next block (about 10 minutes after broadcast). Generally accepted for small amounts. 6+ confirmations. Considered settled by most exchanges and standards. Roughly an hour after broadcast. For accounting, "Cleared" status corresponds roughly to "1+ confirmations" for on-chain transactions. Lightning is binary: settled or not. Mempool. The waiting room for unconfirmed Bitcoin transactions. They sit here until miners include them in a block. Fees Network fee (or miner fee, transaction fee). What you pay to get an on-chain transaction included in a block. Scales with transaction size and network congestion. Paid in bitcoin, deducted from the amount you're sending. Lightning routing fee. The fee paid for a Lightning payment. Typically tiny (a few sats). Covers the routing nodes that forward your payment. Spread. Difference between the buy and sell price at an exchange. Effectively a fee, separate from explicit transaction fees. For accounting, network fees go into a "Network Fees" expense account (or similar). For Lightning, you can ignore tiny fees or itemize for high-volume operations. Mining Mining. The process of running specialized hardware to validate transactions and earn new bitcoin (and fees). The way new bitcoin enters circulation. Block reward. The new bitcoin a miner earns for adding a block. Halves roughly every 4 years (the "halving"). Difficulty. A network parameter that adjusts to keep block times around 10 minutes regardless of total mining power. For accounting, mining income is ordinary revenue at the time of receipt (USD value of the bitcoin received). The bitcoin then has a cost basis equal to its receipt value. Expenses (electricity, hardware, hosting) are operating expenses. Stablecoins Stablecoin. A cryptocurrency designed to hold a stable value, usually pegged to a fiat currency. Examples: USDC (Circle's USD-pegged stablecoin), USDT (Tether), DAI (algorithmic). Stablecoins are NOT bitcoin. They're a separate kind of asset. BitBooks treats them as their own currency (USDC, USDT, etc.). For accounting, stablecoin transactions follow the same patterns as bitcoin: record amount, record exchange rate to functional currency, track gains/losses on sale (usually negligible since stablecoins are stable). Multisig and security Multisig. A wallet that requires multiple signatures to spend. Common: 2-of-3 (any 2 of 3 keys can sign) for shared business control. Seed phrase / mnemonic. The 12 or 24 words that backup a wallet. Whoever has the seed phrase can recreate the wallet's keys. For accounting, multisig and seed phrase details aren't relevant. BitBooks doesn't see your seed phrase or your private keys. Specific Bitcoin features in BitBooks Bitcoin Connections. BitBooks' feature for linking a wallet provider to your books. Auto-imports transactions. See The Bitcoin Connections System. Vault password. The password that locks your provider credentials inside Bitcoin Connections. Never leaves your device. See Connecting Your Bitcoin Wallet. FX revaluation. The accounting practice of marking your bitcoin holdings to current market value periodically. Captures unrealized gains and losses. See Tracking Bitcoin Value Changes. Display modes. Four ways to show bitcoin amounts in BitBooks: BTC High Precision, BTC Consequence, Bitcoins, Satoshis. See BTC Display Modes. Tax-related Cost basis. What you originally paid for the bitcoin. Used to compute gains/losses on sale. FIFO / LIFO / Specific Identification. Methods for assigning cost basis when you sell some of your holding. Tax-jurisdiction-dependent. Capital gains/losses. The difference between sale price and cost basis. Realized when you actually sell. Unrealized gain/loss. The change in market value while you still hold. Whether reportable depends on jurisdiction and standards. Like-kind exchange. A US tax concept that allowed deferring gains by exchanging similar property. Disallowed for crypto in the US since 2017. (Other jurisdictions vary.) Common acronyms - BTC. Bitcoin (the currency). - sats. Satoshis. - LN. Lightning Network. - TX. Transaction. - TXID. Transaction ID. The unique identifier for a Bitcoin transaction. - DCA. Dollar-cost averaging. Buying small amounts on a schedule. - HODL. Hold (community slang). To not sell. - AML / KYC. Anti-Money Laundering / Know Your Customer. Regulatory requirements for some bitcoin services. What you don't need to know (for accounting purposes) - Mining algorithms and hash functions - Specific cryptography (elliptic curves, hashing) - Block structure and consensus rules - Network protocol layers These don't affect bookkeeping. The accounting works the same regardless of how Bitcoin works under the hood. Where to go next - Accounting Terms for Bitcoin Users for the inverse glossary - BitBooks Glossary (App-Specific Terms) for app-specific terms - Capital Gains Tracking for Bitcoin Holdings for the tax mechanics - Tracking Bitcoin Value Changes for FX revaluation - Lightning vs On-Chain for the layer distinction

BitBooks Glossary (App-Specific Terms)

Why this glossary exists BitBooks uses some terms that are specific to the app or that are common in accounting tools but might be unfamiliar. This glossary defines them in plain English. For general accounting terms, see Accounting Terms for Bitcoin Users. For Bitcoin-specific terms, see Bitcoin Terms for Accountants. Page and feature names Insights. The dashboard page. Shows KPIs, working capital, wallet balances, and expense breakdown. What other tools call "Dashboard." Wallets. The page listing every wallet (Bitcoin or fiat) in your organization. Transactions. The day-to-day transaction entry page. Uses Simple Mode. Journal Entries. The advanced transaction entry page. Used by accountants for entries that don't fit Simple Mode. Payments. The page for payment requests (invoices and bills with approval workflow). Reports. Where you find P&L, Balance Sheet, Trial Balance, General Ledger, Cash Flow, Activity Log. Admin. Where settings, users, chart of accounts, contacts, and connectors live. Connectors. The Admin section for Bitcoin Connections (auto-sync wallet integration). Modes and statuses Simple Mode. The user-friendly transaction form. Available on the Transactions page. Doesn't show debits and credits. Advanced Mode. The accountant-style entry form. Available on the Journal Entries page. Shows full debits and credits. Standard transaction. A transaction with one wallet and one category. The default Simple Mode shape. Split transaction. A transaction with one wallet and multiple categories that share the amount. Transfer transaction. A transaction moving money between two of your own wallets. Draft. A saved but un-posted entry. Doesn't show on reports. Editable. Deletable. Posted. A finalized entry. Shows on reports. Locked except for memo and attachments. Approved. A Posted entry that's been formally approved by an authorized user. Reversed. A Posted entry that's been canceled by a reversing entry. Both stay in the audit trail. Pending Approval. An entry that exceeds the approval threshold and is awaiting an authorized approver. Cleared statuses Not cleared. Recorded but not yet confirmed at the wallet provider. Cleared. Confirmed by the wallet provider. Reconciled. Confirmed AND matched in a formal reconciliation pass. Locked from casual editing. Currency concepts Functional currency. Your organization's main currency. Reports default to it. Reporting currency. An optional second currency that shows alongside functional on reports. Transactional currency. The currency a specific transaction happened in. Rate-pinned. A transaction that has its exchange rate locked in at the moment of creation. The rate doesn't change later even if the market does. Pending rate. A transaction whose exchange rate hasn't been fetched yet (provider was down, currency unsupported, future-dated entry). Account-related Chart of Accounts (CoA). The master list of accounts in your organization. Account type. One of: Asset, Liability, Equity, Income, Expense. Account sub-type. A finer category within type (e.g., Asset > WALLETS, Asset > FIXED_ASSETS). System account. An account BitBooks created automatically and that's required for the system to function (Suspense, Retained Earnings). Can't be archived. Wallet account. An account that's also a Wallet. Every Wallet has a corresponding account in the Chart of Accounts. Wallet-related Wallet type. EXCHANGE / HARDWARE / SOFTWARE / CUSTODIAL / BANK. Mostly informational. Sync status. SYNCED, SYNCING, ERROR, NEVER. Shows whether auto-sync is working for the wallet. Bitcoin Connections. The feature that auto-syncs wallets at supported providers (Blink, etc.). Vault password. The password locking your wallet credentials inside Bitcoin Connections. Never leaves your device. 12-word recovery code. The backup for the vault password, shown once at vault creation. Source wallet ID. An opaque identifier given by Bitcoin Connections to track which wallet at the provider corresponds to which Wallet in BitBooks. Transaction-related Reference number. Auto-generated identifier for each transaction (e.g., TX-000142). Editable if you have an external reference. Memo. Free text on a transaction or journal entry. Notes for the reader. To/From address. A Bitcoin address or wallet identifier on a transaction. Linked transfer. Two opposite-direction transactions in different wallets that have been paired as a single transfer for reporting purposes. Bulk Post. Action that posts multiple Drafts at once. Reverse. Action that creates a counter-entry to cancel a Posted entry. Period and time Journal Lock Date. The date that closes everything before it. Once set, entries dated on or before can't be created or edited. Period close. The act of finalizing a period and locking it. Reopen. Lifting the lock by setting the Journal Lock Date earlier. Effective date. When a configuration change (e.g., functional currency change) takes effect. Reports Trial Balance. Health-check report showing all accounts with debits/credits totals; should balance. General Ledger (GL). All transactions, organized by account. GL Detail. Single-account version of the GL. P&L (Profit and Loss). Income and expenses for a period. Aka Income Statement. Balance Sheet. Assets, liabilities, equity at a point in time. Cash Flow Statement. Cash movement for a period. Activity Log. Audit trail of every action (create, update, delete, post, reverse). User and roles Owner. The principal user of an organization. One per org. Admin. Can do almost everything except delete the org. Accountant. Full books access, no settings or user management. Member. Day-to-day bookkeeping. No settings or admin. Viewer. Read-only. Approval threshold. A monetary limit above which transactions require approval. Multi-org Organization. One set of books. Independent from other organizations. Organization switcher. The dropdown at the top of the sidebar that changes which org you're viewing. Archive. Soft-delete. Hides the entity from active views but preserves its data. Delete (organization). Permanent removal of an entire organization. Owner-only action. Imports and migrations Import job. A staged set of records being brought in from QuickBooks, CSV, or another source. Reconciliation (during import). A diff-style review of which staged records would be created, updated, or skipped. Commit (an import). Finalizing the import after review. The staged records become real records in your books. Other useful terms Audit reason. A free-text explanation required for certain configuration changes (e.g., functional currency change). At least 40 characters. Approval workflow. The process by which a Pending Approval transaction becomes Posted. FX revaluation run. A specific instance of revaluing your foreign currency or Bitcoin holdings to current market. Onboarding wizard. The guided flow for setting up a new organization. Sample data. Illustrative numbers shown on the Insights page when an organization is brand new (no real data yet). Where to go next - Accounting Terms for Bitcoin Users for accounting fundamentals - Bitcoin Terms for Accountants for Bitcoin fundamentals - What is BitBooks? for the overview - Understanding the BitBooks Workspace for the layout tour