Principles Of Accounting - Chapter 2 Terms

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Account

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The basic summary device of accounting; the detailed record of all the changes in a particular asset, liability, or owner's equity as a result of transactions.

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Balance

Back 2

The difference between an account's total debit and total credit amounts; the ending value of an account.

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Chart of Accounts

Back 3

A list of all the accounts of a business and the numbers assigned to those accounts.

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Credit

Back 4

The right side of any account; an entry made to the right side of an account.

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Debit

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The left side of any account; an entry made to the left side of an account.

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Double-Entry Accounting

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The rule of accounting that specifies, because transactions are measurable exchanges, every transaction involves at least two accounts and will thus be recorded with equal amounts of debits and credits.

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Journal

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The chronological accounting record of the transactions of a business.

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Journalize

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Enter a transaction in a journal. Also record.

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Ledger

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The accounting record summarizing in accounts, the transactions of a business and showing the resulting account balances.

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Normal Balance

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The balance that appears on the side of an account where increases are recorded; the expected balance of an account.

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Note Receivable

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A written promise of future payment received by the business.

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Posting

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Copying amounts from the journal to accounts in the ledger.

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Posting Reference

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A notation in the journal and ledger that links these two accounting records together.

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Promisory Note

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A written pledge to pay a fixed amount of money at a later date.

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Record

Back 15

Enter a transaction in a journal. Also called journalize.

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T-Account

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An informal account form used to summarize transactions, where the top of the T holds the account title and the base divides the debit and credit sides of the account.

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Transaction

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The economic events, or exchanges, that have a measurable impact on the financial position of a business.

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Trial Balance

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A list of all the accounts of a business and their balances in balance sheet order; its purpose is to verify that total debits equal total credits.