Financial Accounting Chp. 2

Trial Balance

A comparison of the total of debit and credit balances in the accounts to check that they are equal.

Journal Form

A form of journal in which the date, the debit account, and the debit amount of a transaction are recorded on one line and the credit account and credit amount on the next line.

Compound Entry

An entry that has more than one debit or credit entry.

Source Document

An invoice, check, receipt, or other document that supports a transaction.

Journal Entry

Journal notations that record a single transactions.

Recognition Point

Predetermined time at which a transaction should be recorded.

Double-Entry System

The accounting system in which each transaction is recorded with at least one debit and one credit, so that the total dollar amount of debits and the total dollar amount of credits equal each other.

General Ledger

The book or file that contains all of the company's accounts, arranged in the order of the chart of accounts.

Recognition

The determination of when a business transaction should be recorded.

Balance

The difference in dollars between the total debit footing and the total credit footing of an account. Also called account balance.

Cost

The exchange price associated with a business transaction at the point of recognition.

Ledger Account Form

The form of account that has four dollar amount columns: one column for debit entries, one column for credit entries, and two columns (debit and credit) for showing the balance of the account.

Debit

The left side of an account.

Chart of Accounts

The list of account numbers and titles.

Cost Principle

The practice of recording transactions at cost.

Valuation

The process of assigning a monetary value to a business transaction.

Classification

The process of assigning transactions to the appropriate accounts.

Journalizing

The process of recording transactions in a journal.

Posting

The process of transferring journal entry information from the journal to the ledger.

Credit

The right side of an account.

General Journal

The simplest and most flexible type of journal.

T Account

The simplest form of an account, used to analyze transactions.

Normal Balance

The usual balance of an account; also the side (debit or credit) that increases the account.

Footings

Working totals of columns of numbers. To foot means to total a column of numbers.

Journal

A chronological record of all transactions; the place where transactions first enter the accounting records. Also called book of original entry.