Accounting Book #3

Question 1

Asset

Answer 1

Anything of value owned by a business.

Question 2

Chart of Accounts

Answer 2

A list of all accounts used by an entity indicating the identifying number, the account title and classification of each accounting equation item.

Question 3

Credit

Answer 3

Refers to any entry made in the right-hand amount column.

Question 4

Debit

Answer 4

Refers to any entry made in the left-hand amount column.

Question 5

Expenses

Answer 5

The cost of goods and services used in the operation of a business.

Question 6

Revenue

Answer 6

The increase in owners equity caused by the inflow of assets from the sale of goods and services.

Question 7

When analyzing transactions affecting the balance sheet items, what are the four questions that must be asked?

Answer 7

What accounts are affected?
What is the account classification?
How is the balance affected (increase of decrease)?
How is each amount entered in the T account?

Question 8

Contra account

Answer 8

an account that has a negative effect on a controlling account.

Question 9

Income statement

Answer 9

a financial statement that reports the revenue, expenses, and net income or net loss of a business for a specific period of time.

Question 10

Permanent Accounts

Answer 10

balance sheet accounts ( assets, liabilities, and capital) that provide data from one accounting period to the next.

Question 11

Temporary Accounts

Answer 11

accounts (such as Revenue and Expenses) that gather data for one accounting period only; accounts used to compute net income for each accounting period.

Question 12

Chronological

Answer 12

in order by date.

Question 13

Double-entry Accounting

Answer 13

each financial transaction has a double effect and is recorded so that the total of the debit amounts is always equal to the total of the credit amounts.

Question 14

Entry

Answer 14

a transaction recorded in journal.

Question 15

Journal

Answer 15

a business form used for recording accounting information in chronological order with transactions analyzed in terms of the accounts to be debited and credited.

Question 16

Journalizing

Answer 16

recording information in chronological order in a journal, using the source document as evidence of the business transaction.

Question 17

Source Document

Answer 17

a written or printed paper that provides evidence that a transaction occurred and gives the information needed to analyze the transaction; e.g., a purchase invoice, a check stub, a receipt, a memorandum, etc.

Question 18

Journal entries contain the following information.

Answer 18

The date of the transaction.
The titles of the accounts affected: accounts to be debited are listed first.
The amounts of the debits and credits.
The source document number and/or a brief explanation.