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