Chapter 2 accounting

Income Statement

A Financial statement showing the results of business transactions involving revenue and expense accounts over a period of time

Statement of Owners Equity

A financial statement showing the activity in the owners equity or capital account, over the financial period

T account form

A form of account in the shape of a T, which increases and decreases in the account may be recorded.

Trial Balance

A list of all account balances to prove that the total of all debit balances equals the total of all credit balances

Financial Statement

A report prepared by accountants that summarizes the financial affairs of the business

Compound Entry

A transaction that requires more than one debit or more than one credit to be recorded

Slide

An error in placing the decimal point in a number

Transposition

An error that involves interchanging, or switching around, digits during the recording of a number

Profit and loss statement

Another term for income statement

Debit

The Left side on a T account Debits represent increases in... -Asset -Drawing -Expense

Report Form

The form of the balance sheet in which assets are placed at the top and liabilities and owners equity are placed below

Financial Position

The resources or assets owned by an organization at a point in time, offset by the claims against those resources and owners equity, shown on the Balance Sheet

Net Loss

The results when total expenses exceeds total revenue

Net Income

The results when total revenue exceeds total expenses over a period of time

Credit

The right side on a T account Credits represent increases in.. -Liability -Capital -Revenue

Balance Sheet

a financial sheet showing the functional statement showing the financial position of an organization on a given date, such as June 30 or December 31. The balance sheet lists the balances in the asset, liability, and owners equity accounts.

Assets

the left side is the increase side

Drawing

the left side is the increase side

expenses

the left side is the increase side

debit

the left side of the t account

Normal Balance

the plus side of a T account

Capital

the right side is the increase side

Liabilities

the right side is the increase side

Revenue

the right side is the increase side

Footing

the totals of each side of a T account