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27 Cards in this Set
- Front
- Back
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What is a journal?
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A journal is a record in which transactions are initially recorded in chronological order
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What is a journal entry?
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A journal entry is the record of a single transaction that in entered in a company’s journal.
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What is a general ledger?
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The general ledger is the primary record of a company’s financial information. It contains all the accounts maintain by the company – asset, liability, equity, revenue and expense accounts.
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What is posting?
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Posting is the process of transferring the amount from the journal to the general ledger.
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What is a chart of account?
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All of a company’s accounts can be found on the company’s chart of accounts. A chart of accounts is a list of all the accounts in a firm’s accounting records along with account numbers to assist in maintaining accurate accounting records.
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How do accountants record transactions?
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The method accountants use to record transactions in the journal and post them to the general ledger is called double-entry bookkeeping. The word “double” is used because each dollar amount in a transaction will be recorded in at least two accounts.
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What is a debit?
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Debit – the left side of an account.
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What is a credit?
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Credit – the right side of an account.
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How does a debit affect an asset account?
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Assets are increased with debits and decreased with credits.
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How does a debit affect a liability or a shareholder's equity account?
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Liabilities and shareholders’ equity are increased with credits and decreased with debits
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What is a normal balance?
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A normal balance is the increase side of an account.
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How does a debit affect a revenue?
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Revenues are increased with credits and decreased with debits.
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How does a debit affect an expense?
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Expenses are increased with debits and decreased with credits.
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What is the accounting cycle?
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The accounting cycle is the steps an accountant follows to analyze and record business transactions, prepare the financial statements, and get ready for the next accounting period
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What is the first step in the accounting cycle?
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The first step is the cycle is to analyze and record transactions in the journal.
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What is the second step in the accounting cycle?
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The second step is to post the journal entries to the general ledger.
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What does posting mean?
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Posting – transferring the amounts from journal entries to the general ledger accounts.
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What is the third step in the accounting cycle?
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The third step is to prepare an unadjusted trial balance at the end of the accounting period.
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What is a trial balance?
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A trial balance is a list of all the accounts in the general ledger with the respective debit or credit balances at a given point in time. The trial balance ensures debits = credits in the accounting records.
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How are debits and credits used in a journal entry?
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The general ledger’s system of debits and credits will have the dollar amount of debits equal to the dollar amount of credits in every journal entry.
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What is the format of preparing a journal entry?
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Debits are always listed first, and credits are listed after all the debits.
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What is working capital?
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Working capital is a measure used to evaluate liquidity.
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How do you compute working capital?
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Working capital = Current assets – Current liabilities
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What is a quick ratio?
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Quick ratio is a measure of a company’s ability to meet its short-term obligations.
It is also known as the acid-test ratio. |
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What balance sheets accounts are included in a quick ratio?
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Quick ratio = Cash, accounts receivable, and short-term investments divided by current liabilities.
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What is a T Account?
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T-accounts are used to represent a page in the general ledger. The left side is the debit side and the right side is the credit side.
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How do you calculate an account balance?
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Every account balance is derived from four components
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