Analizing And Recording Transactions

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account

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place or location within an accounting wywtem in which the increases and decreases in a specific asset, liability, or equity are recorded and stored

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account balance

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the difference between the increases (including the beginning balance) and decreases recorded in an account

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accounting cycle

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the steps repeated each reporting period for the purpose of preparing financial statements for users

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accounts payable

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obligations that arise when a promise to pay later is made in connection with purchases of merchandise, supplies, or equipment

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accounts receivable

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recorded when services are performed for or goods are sold to customers in return for promises to pay in the future; transactions are said to be on credit or on account; increased by services performed or goods sold on credit and decreased by cutomer payments

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balance column ledger account

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an account with debit and credit columns for recording entries and a thrid column showing the balance of the account after each entry is posted

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chart of accounts

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a list of all accounts used by a company; includes the identification number assigned to each account

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coumpound journal entry

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a journal entry that affects at least three accounts

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credit

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an entry that decreases asset, expense, and owner's withdrawals accounts or increases liability, owner's capital, and revenue accounts; recorded on the right side of a T-account

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debit

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an entry that increases asset, expense, and owner's withdrawals accounts or decreases liability, owner's capital, and revenue accounts; recorded on the left side of a T-account

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double-entry accounting

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an accounting system where every transaction affects and is recorded in at least two accounts; the sume of the debits for all entries must equal the sum of the credits for all entries

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General Journal

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the most flexible type of journal; can be used to record any kind of transaction

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Journal/book of original entry

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a record where transactions are recorded before they are recorded in accounts; amounts are posted from here to the ledger

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Journalizing

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recording transactions in a journal

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ledger

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a record containing all accounts used by a business

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normal balance

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the debit or credit side on which an account increases

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note receivable/promissory note

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an unconditional written promise to pay a definite sume of money on demand or on a defined future date

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post(ing)

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transfer journal entry information to ledger accounts

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posting reference (PR) column

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a column in journals where individual account numbers are entered when entries are posted to the ledger; a column in ledgers where journal page numbers are entered when entries are posted

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prepaid expenses

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an asset account containing payments made for assets that are not to be used until later

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T-account

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a simple characterization of an account form used as a helpful tool in showing the effects of transactions and events on specific accounts

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transposition error

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error due to two digits being switched within a number

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trial balance

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a list of accounts and their balances at a point in time; the total debit balances should equal the total credit balances

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unearned revenues

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liabilities created when customers pay in advance for products or services; created when cash received before revenues are earned; satisfied by delivering the products or services in the future