Chapter 2&3

Standard account

a formal account that includes columns for date, explanation, posting reference, debit, and credit.

Ledger

a group of accounts that records data from business transactions.

Compound journal entry

a journal entry that affects more than two accounts.

Trial balance

a list of the ending balances of all the accounts in a ledger. the total of the debits should equal the total of the credits.

Journal entry

the transaction (debits and credits) that is recorded into a journal once it is analyzed.

Posting

the transferring, copying, or recording information from a journal to a ledger.

Footings

the totals of each side of a T account.

Journal

a listing of business transactions in chronological order. the journal links on one page the debit and credit parts of transactions. (alternatively known as general journal)

Chart of accounts

a numbering system of accounts that lists the account titles and the account numbers to be used by a company.

Four-column account

a running balance accounts that records debits and credits and has a column for an ending balance (debit or credit). it replaces the standard two-column account we used earlier.

T-account

a skeleton version of a standard account, used for demonstration purposes.

Compound entry

a transaction involving more than one debit or credit.

Cross-referencing

adding to the PR column of the journal the account number of the ledger account that was updating from the journal.

Accounting

an accounting device used in bookkeeping to record increases and decreases of business transactions relating to individual assets, liabilities, capital, withdrawals, revenue, expenses, and so on.

Double-entry bookkeeping

an accounting system in which the recording of each transaction affects two or more accounts and the total of the debits is equal to the total of the credits.

Trial balance

an informal listing of the ledger accounts and their balances in the ledger to aid in proving the equality of debits and credits.

Book of final entry

book that receives information about business transactions from a book or original entry (a journal).

Book of original entry

book that records the first formal information about business transactions.

Interim reports

financial statements that are prepared for a month, quarter, or some other portion of the fiscal year.

Accounting cycle

for each accounting period, the processes that begins with the recording of businesses transactions or procedures into a journal and ends with the completion of a post closing trial balance.

Calendar years

the 12-month period a business chooses for the accounting year. (alternatively known as fiscal year and natural business year).

Transposition

the accidental rearrangement of digits of a number. ex. 152-->125

Ending balance

the difference between footings in a T account.

Slide

the error that results in adding or deleting zeros in the writing of a number. ex. 79,200-->7,920

Debit

the left-hand side of any account. a number entered on the left side of any account is said to be debited to an account.

Accounting period

the period of the time for which an income statement is prepared.

Journalizing

the process of recording a transaction entry into the journal.

Credit

the right-hand side of any account. a number entered on the right side of any account is said to be credited to an account.

Normal balance of an account

the side of an account that increases by the rules of debit and credit.