02 Flashcards
What is an account?
An account is a record of increases and decreases for each:
- asset
- liability
- equity
- revenue
- expense
What is a chart of accounts?
Chart of accounts is a listing of account titles and identification codes used in the general ledger.
What are the 5 elements of the general ledger?
- Assets
- Liabilities
- Equity
- Revenues
- Expenses
What is journalizing?
Journalizing is the process of recording a transaction in the journal.
What is posting?
Posting is the process of transferring debits and credits from journal entries to related general ledger accounts (T accounts).
What is the debit-credit system?
Debit-Credit system describes increases and decreases as debits and credits, ensuring debits equal credits.
What are T-Accounts?
T-Accounts are a graphical representation of accounts where debits are recorded on the left and credits on the right.
What is the accounting equation?
quite a useless card
Accounting equation requires that increases and decreases are balanced, ensuring that debits equal credits.
What is the extended accounting equation?
The extended accounting equation expands equity.
Assets = Liabilities + Common Stock - Dividends + Revenues - Expenses
What is the purpose of the accounting cycle?
Accounting cycle is a sequence of activities performed to accumulate and report financial statements.
What are the steps in the accounting cycle?
(5)
Steps in the accounting cycle include:
- Journalising
- Posting (to general ledger)
- Preparing trial balance (debits = credits)
- Adjusting entries
- Preparing financial statements.