CHAPTER 3 Flashcards
___________ and __________ are the starting points in the accounting cycle.
Transactions and events
___________ identify and describe transactions and events entering the accounting process.
Source documents
The ____________ is a chronological record of the entity’s transactions.
journal
A ____________ shows all the effects of a business transaction in terms of debits and credits.
journal entry
A ________ is called the book of original entry.
Journal
The ___________ and ___________ of transactions of the business determine the number and the type of journal needed.
nature and volume
FORMAT OF A JOURNAL
- DATE
- ACCOUNT TITLES
- P.R (POSTING REFERENCES)
- DEBIT
- CREDIT
The rules of double-entry are observed in each transaction:
- Two or more accounts are affected by each transaction.
- The sum of the debits for every transaction equals the sum of the credits.
- The equality of the accounting equation is always maintained.
A listing of all the accounts and their account numbers in the ledger is known as the ________________
Chart of Accounts.
A grouping of the entity’s account is referred to as a
ledger.
are used to gather information for a particular accounting period. At the end of the period, the balances of these accounts are transferred to a permanent owner’s equity account.
Temporary or nominal accounts
The trial balance is a list of all accounts with their respective debit or credit balances. It is prepared to verify the equality of debits and credits in the ledger at the end of each accounting period or at any time the postings are updated.
-is a control device that helps minimize accounting errors. When the totals are equal.
-This equality provides an interim proof of the accuracy records but it does not signify the absence of errors.
trial balance
An ______________ in the totals of the debits and credits would automatically signal the presence of an error.
inequality
