ACCTG+ CHAPTER 5

debit balance

debit total is higher than credit total

COMPOUND JOURNAL ENTRY

A journal entry with more than one debit, credit, or both

SIMPLE JOURNAL ENTRY

A journal entry with one credit and one debit

check

A negotiable instrument used as a substitute for cash. payment is drawn against the account of the entity

promissory note

Is a written promise to pay a specified amount of money at a certain date.

NORMAL BALANCE

Refers to the usual position of an account in the T-account.

chart of accounts

list of account titles

trial balance

list of accounts with ledger balances

posting

the process of transferring the debit and credit information from the journal to individual accounts in the general ledger

GENERAL JOURNAL ENTRIES

These accounting entries are the original recording of transactions and events in the general journal during the accounting period, and are recorded chronologically

ADJUSTING JOURNAL ENTRIES

These are journal entries after the preparation of an unadjusted trial balance intended to bring the assets, liabilities, revenues and expenses up-to-date at the end of the accounting period

MEMORANDUM ENTRIES

These entries are intended to provide information regarding specific transactions or events which do not have monetary effect to the elements of accounting but may have future financial implication to the business. These entries are generally recorded in the general ledger as an explanation with no account titles, debit and credit amounts.

REVERSING ENTRIES

These entries are made at the beginning o the next accounting period and are exactly the reverse of some adjusting entries

CORRECTING ENTRIES

These journal entries are designed to rectify erroneous entries made previously in the general journal and general ledgers

CLOSING ENTRIES

These journal entries are recorded after the financial statements are prepared. They are intended to close or bring to zero balances all nominal or temporary accounts such as revenue, cost, and expenses, and drawing accounts

statement of accounts

a bill presented to a customer for service rendered or merchandise given for which payment is demandable

journal

accounts are in chronological order

control accounts

accounts receivable and accounts payable in the general ledger

customer's card and creditor's card

an individual record to keep track of the customer's and supplier's account

debit side

assets, drawings, and expenses

RULES OF DEBIT AND CREDIT

based on the normal balance of an accounting element or account.

credit balance

credit total is higher than debit total

Rule of debit and credit for Liabilities

debit decreases. credit increases

rule of debit and credit for owner's equity

debit decreases. credit increases

rule of debit and credit for assets

debit increases. credit decreases

account balance

difference between the debit total and credit total

trial balance

ensures that the debit and credit total are the same

credit side

liabilities, capital, revenue

cash or check voucher

issued when cash is paid or check is issued

official receipt

issued when cash is received by the entity.

invoice

issued when service or merchandise is given to a client

ledger

shows all the changes in one page