Accounting Terms Chapter 3
What is meant by the normal balance of an account?
For example : an asset account would have a debit amount
Describe a T- Account
Format used to analyze transaction, and showing amounts coming in and leaving an account
What does a trial balance prove
If the debits and credits match
Name the Categories of the accounts that are increased with credits
- Assets - Liabilities (Credit) - Owners Equity (Credit) - Revenues (Credit) - Expenses
Name the categories of accounts that are increased with debits
- Assets (Debit) - Liabilities - Owners Equity - Revenues - Expenses (Debit)
Explain what is mean by the Double- entry system of accounting.
- Every transaction is recorded so that the equality of debits and credits is maintained. - And the accounting equation is kept in balance
What is journalizing?
Act of recording journal entries
Describe a trial balance so someone could use your description to create one.
An account type, with the amount of credit or debit given for each account
What is an account?
Basic unit for recording a transaction
What is an alternate name for the journal?
Book of original entry
What is the journal?
Chronological record of transactions
What does debit mean?
Entity on the left
What does Credit mean?
Entity on the right
Is a trial balance a financial statement?
No
If a trial balance is in balance, does that mean that all transactions have been journalized and posted correctly?
No, he could debit or credit it to the wrong account
What is a chart of accounts?
Numerical list of all the accounts an entity uses
What does posting mean?
Process of transferring amounts from a journal to the ledger accounts
What is an alternate term for General Ledger
Set of Accounts
Define "General Ledger"
The file or book that contains the accounts
What is a T- Account often Used for?
The increases and decreases in an account