Accounting // Ch. 3"Beginning the Accounting Cycle"

Compound Journal Entry

A journal entry that affects more than two accounts.

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'.

Book of final entry

Book that receives information about business transactions from a book of original entry (a journal) Example: a ledger

Book of original entry

Book that records the first formal information about business transactions. For example: a journal.

Calendar Year

The 12-month period a business chooses for it's accounting period. Alternatively known as 'fiscal year' and 'natural business year'.

Transposition

The accidental rearrangement of digits of a number. Example: 152 >> 125

Slide

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

Accounting Period

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

Journalizing

The process of recording a transaction entry into the journal.

Journal Entry

The transactions (Debits and Credits) that is recorded into a journal once it is analayzed.

Posting

The transferring, copying, or recording of information froma journal to a ledger.

Keep in mind that as ____ increase, owner's equity decreases

Withdrawals

Four-Column Account

A running balance account 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.

Cross-referencing

Adding to the PR column of the journal the account member of the ledger account that was updated from the journal.

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.

Rent paid in advance is an...

Asset

Supplies become an __ when used up

Expense

Remember, ____ are recorded when they are incurred, no matter when they are paid.

Expenses

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 process that begins with the recording with the recording of business transactions or procedures into a journal and ends with the completion of a post-closing trial balance.

The ____(Green) is the book of original entry and the ____(Blue) is the book of final entry.

Journal and Ledger