Accounting Vocabulary terms chapters 3 & 4

General ledger

A complete set of all the accounts used by a business. The general ledger accumulates a compkete record of the debits and credits made to each account as a result of entries made in the journal.

Journal

A day- by- day listing of the transactions of a business.

Compound entry

A general journal entry that affects more than two accounts.

Two- collumn general journal

A journal with only two amount collumns, one for debit amounts and one for credit amounts

Chart of accounts

A list of all accounts used by a business

Trial Balance

A list of all accounts, showing the title and balance of each account, used to prove that the sum of the debits equals the sum of the credits.

Trial balance

A list used to prove that the totals of the debit and credit balances in the ledger accounts are equal

Ruling method

A method of correcting any entry in which a line is drawn through the error and the correct information is placed above it.

Double- entry accounting

A system in which each transaction has a dual effect on the accounting elements.

General ledger account

An account with collumns for the debit or credit transaction and collumns for the debit or credit running balance.

Correcting entry

An entry to correct an incorrect entry that has been jurnalized and posted to the wrong account.

Slide error

An error that occurs when debit or credit amounts "slide" a digit or two to the left or right

Transposition error

An error that occurs when two digits are reversed

Source document

Any document that provides information about a business transaction.

Posting

Copying the debits and credits from the journal to the ledger accounts

Balance

The difference between the footings of an account

Cross- reference

The information in the Posting Reference columns of the journal and ledger thart provides a link between the journal and ledger.

Book of original entry

The journal or the first formal accounting record of a transaction.

Debit Balance

The normal balance of asset, expense, and drawing on accounts.

Credit Balance

The normal balance of liability, owner's equity, and revenue on accounts.

Normal balance

The side of an acount that is increased

Footings

The total dollar amounts on the debit and credit sides of an account.

Debit

To enter an amount on the left side of an account.

Credit

To enter an amount on the right side of an account

Journalizing

Entering the transactions in a journal