Chapter 2 Vocab Flashcards
What is an account?
A record of the business activities related to a particular item.
What is the accounting cycle?
A full set of procedures used to accomplish the measurement/communication process of financial accounting.
What is a chart of accounts?
A list of all account names used to record transactions of a company.
What does ‘credit’ refer to in accounting?
The right side of an account.
What effect does a credit have on asset, expense, or dividend accounts?
It indicates a decrease.
What effect does a credit have on liability, stockholders equity, or revenue accounts?
It indicates an increase.
What is a credit?
The right side of an account.
What does ‘debit’ refer to in accounting?
The left side of an account.
What does a debit indicate for asset, expense, or dividend accounts?
An increase.
What does a debit indicate for liability, stockholders’ equity, or revenue accounts?
A decrease.
What is a debit?
The left side of an account.
What are external transactions?
Transactions the firm conducts with a separate economic entity.
What is a general ledger?
A collection of each account with its individual transactions and resulting account balance.
What is a journal?
A chronological record of all transactions affecting a firm.
What is a journal entry?
The format used for recording business transactions.
What is posting?
The process of transferring the debit and credit information from the journal to individual accounts in the general ledger.
What is the revenue recognition principle?
Record revenue in the period in which we provide goods and services to customers for the amount the company is entitled to receive.
What is a t account?
A simplified form of a general ledger with space at the top for the account title, one side for recording debits, and one side for recording credits.
What is a trial balance?
A list of all accounts and their balances at a particular date, showing that total debits equal total credits.
