Chapter 2 Key Terms and Definitions Flashcards
What is an Account?
Record within an accounting system in which increases an decreases are entered and stored in a specific asset, liability, equity, revenue, or expense.
What is a Account Balance?
Difference between total debits and total credits.(Including the beginning balance) for an account.
What is a Balance column account?
Account with debit and credit columns for recording entries and another column for showing the balance of the account after each entry.
What is a chart of accounts?
List of accounts used by a company; includes an identification number for each account.
What is common stock?
A corporations basic ownership share; also generically called capital stock.
What is a Compound Journal Entry?
A journal entry that affects at least three accounts.
What is a credit?
Recorded on the right side; an entry that decreases asset and expense accounts, and increases liability, revenue, and most equity accounts.
What are creditors?
Individuals or organizations entitled to receive ppayments.
What is a debit?
Recorded on the left side; an entry that increases asset and expense accounts, and decreases liablility revenue, and most equity accounts.
What are debtors?
Individuals or organizations that owe money.
What is Debt ratio?
Ration of total liabilities over total assests; used to reflect risk asociated with a company’s debts.
What are dividends?
A corporation’s distributions of assets to its owners.
What is double entry accounting?
Accounting systemin which each transaction affects at least two accounts and has at least one debit and one credit.
What is a General Journal?
All purpose journal for recording the debits and credits of transactions and events.
What is a General Ledger?
Record containing all accounts(with amounts ) for a business;
