Financial Accounting, Chapter 2

Front 1

The steps in the accounting process that focus on analyzing and recording transactions are (4)

Back 1

- Analyze each transaction from source documents.
- Record relevant transactions in a journal.
- Post information to ledger accounts.
- Prepare and analyze the trial balance.

Front 2

Examples of source documents:

Back 2

sales tickets, sales invoices, checks, bank statements, and purchase orders.

Front 3

Define Trial Balance

Back 3

A list of all accounts and their balances at a point in time.

Front 4

Define Account

Back 4

An account is simply a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.

Front 5

A compilation of all accounts is called a __________.

Back 5

General ledger

Front 6

Chart of Accounts...

Back 6

A list of accounts on the general ledger with account numbers.

Front 7

Increase Debit:

Back 7

- Assets
- Expenses
- Dividends

Front 8

Increase Credit

Back 8

- Liabilities
- Common Stock
- Revenue

Front 9

Define Account Balance

Back 9

The difference between the total debits and credits recorded in the account.

Front 10

Define Normal Balance of an Account

Back 10

Left or right side where the increases are recorded.

Front 11

A Journal..

Back 11

provides a complete record of each transaction in one place: shows debits and credits for each transaction in chronological order.

Front 12

Posting

Back 12

The process of transferring journal entry information to the ledger.

Front 13

A trial balance is a list of accounts and their balances. It proves..

Back 13

debits=credits

Front 14

Define Debt Ratio

Back 14

A way to assess the risk involved with a companies use of liabilities.

Front 15

Formula for debt ratio:

Back 15

Total Liabilities/Total Assets