Accounting 1 - Ch 5 & 6: Journalizing and Posting

receipt

A business form giving written acknowledgement for cash received

memorandum

A form on which a brief message is written describing a transaction

invoice

A form that lists specific information about a business transaction involving the buying or selling of an item

correcting entry

A journal entry that is made in order to fix an erroneous transaction that had previously been recorded in the general ledger and posted to the ledger accounts.

General Ledger

The "book" comprised of all the individual accounts needed to record the assets, liabilities, equity, revenue, expense, gain, and loss transactions of a business. In most cases, transactions are posted directly to these accounts. Each account is assigned a unique identifying account number.

ledger accounts

The "name" given to the accounts found in the General Ledger.

The Books of Original Entry

The accounting journals in which business transactions are initially recorded are known as _____. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced.

General Journal

an all-purpose journal in which all the transactions of a business may be recorded

vendor

an organization from whom a business purchases goods and services

customer

an organization or individual who purchases a business's goods or services

journal

A "book" for recording transactions in chronological order

accounting cycle

Activities the business completes within the fiscal period

proving the ledger

Adding all the debit balances and all the credit balances (using a trial balance) and then comparing the two totals to see whether they are equal is called

Chart of Accounts

An official list of all the accounts used for jounalizing business's transactions

source document

Evidence a transaction occurred

computerized accounting system

Information is recorded by entering it into a computer

manual accounting system

Information is recorded by hand

trial balance

Proof of the equality of total debits and total credits. The fifth step in the accounting cycle.

check stub

The part remaining in the business's checkbook after a check has been torn out

journalizing

The process of recording business transactions in a journal.

posting

The process of transferring entries from a journal of original entry to a ledger book.

slide error

This type of error results when a decimal point is moved by mistake. If the difference between the columns is evenly divisible by 9, this type of error may have occurred.

transposition error

This type of error results when two numbers are accidentally reversed. If the difference between the columns is evenly divisible by 9, this type of error may have occurred.

2

To determine if one of the account balances has been recorded in the wrong column of a trial balance, divide the difference between the column totals by _______. Then look in the debit and credit columns for an account balance matching this amount. Check to see if the balance was entered in the wrong column.

verification

To ensure the accuracy, correctness, or truth of the information in a source document.

False. Never erase an error!!! Erasures look suspicious. When an error in a journal entry is discovered after posting, the correction is made by a correcting entry.

True or False: If a mistake is found after posting, it can be erased.

False. Never erase an error!!! Erasures look suspicious. When an error in a journal entry is discovered before posting, it may be corrected by drawing a single line through the incorrect item and writing the correction directly above it.

True or False: If a mistake is made when journalizing but prior to posting, it can be erased.

account clerk/accounting clerk

Verifying the accuracy of invoices and other accounting documents or records. Update and maintain accounting journals, ledgers and other records detailing financial business transactions (e.g., disbursements, expense vouchers, receipts, accounts payable). This is the job description for a(n)

liquidity

the ease with which an asset can be converted into cash

chronological order

transactions are recorded in the order they happen/occur