Chapter 4

4) when both debit and credit amounts have been posted to an account, what determines whether the balance is a debit or credit?

When debits exceed credits, then it's debit balance. When credit exceeds debits, then it's credit balance.

Proving cash

Determining that the account of cash agrees with the balance if the cash account in the accounting records.

Correcting entry

The incorrect journal entry should be corrected with an additional journal entry.

7) when is a correcting entry necessary?

When a transaction has been improperly journalized and posted to the ledger.

Account number

The number assigned to an account.

File maintenance

The procedure for arranging accounts in a general ledger, assigning account number, and keeping records current.

8) what are the three steps for correcting an incorrect amount posted to an account?

1) draw a line through the incorrect amount. 2) write the correct amount just above the correction in the same space. 3) recalculate the account balance.

9) what are the three steps for correcting an amount posted to an incorrect column?

1) draw a line through the incorrect item in the account. 2) record the posting in the correct amount column. 3) recalculate the account balance.

2) list the two steps for opening an account.

1) write the account title after the word account in the heading. 2) write the account number after the words account # in the heading.

3) list the five steps of posting from the general journal to the general ledger.

1) write the date in date column. 2) write the journal page number in the post ref. column. 3) write the amount in the debit or credit column. 4) calculate and write the new balance in the balance debit or credit column. 5) return to the journal and write account number in the post ref. column of the journal.

Ledger

A group of accounts.

6) what is a correcting entry?

A journal entry made to correct an error in the ledger.

General ledger

A ledger that contains all accounts needed to prepare financial statements.

5) which two accounts are compared when proving cash?

The cash balance in the checkbook and the cash balance in the cash account.

1) describe the two parts of an account number

The first digit indicates in which general ledger division the account is located. The second and third digits indicate the location of the account within that division.

Posting

Transforming information from a journal entry to a ledger account.

Opening an account

Writing an account title and number on the heading of an account.