Chapter 3

Question 1

journalizing

Answer 1

recording a transaction into a journal

Question 2

transposition

Answer 2

accidental rearrangement of digits of #

Question 3

journal entry

Answer 3

transaction recorded into journal once analyzed

Question 4

accounting cycle

Answer 4

for each accounting period -> records transactions into journal & ends with trial balance

Question 5

4 column account (ledger)

Answer 5

running balance account that records debits & credits

Question 6

cross-referencing

Answer 6

adding account # of ledger to journal

Question 7

journal

Answer 7

listing of business transactions in chronological order

Question 8

compound journal entry

Answer 8

affects more than 2 accounts

Question 9

calendar year

Answer 9

jan 1 - dec 31

Question 10

fiscal year

Answer 10

12 consecutive months

Question 11

interim reports

Answer 11

monthly, quarterly, annually

Question 12

posting

Answer 12

transfer of information from journal to ledger

Question 13

slide

Answer 13

error resulting from adding/deleting zeros

Question 14

trial balance

Answer 14

list of individual accounts with balances taken from ledger

Question 15

accounting period

Answer 15

period of time covered by income statement

Question 16

journalizing a transaction

Answer 16

DEBIT recorded FIRST
CREDIT indented & BELOW debit
explanation
must affect two different accounts
total debits = total credits

Question 17

journal entry

Answer 17

Date:
Year & month of the journal entry (only include once)
Day
Titles & Description:
Names of accounts
Explanation
Dr./Cr.:
$ amount

Question 18

four-column account (ledger) layout

Answer 18

Account name on top left, account number (goes to P.R. of journal) on top right
Date, explanation, P.R. (journal page), Dr., Cr., Balance of Dr., Cr. (running total)

Question 19

net income

Answer 19

if revenue > expenses

Question 20

net loss

Answer 20

revenue < expenses

Question 21

income statement

Answer 21

company name
income statement
for month ended
revenue:
fees
operating expenses:
expenses
total operating expenses:
net income/loss (revenue-expenses)

Question 22

statement of owner’s equity

Answer 22

company name
statement of owner’s equity
for month ended
capital (beginning of month)
net income for month (from income statement)
less: withdrawals
increase/decrease in capital (net income-withdrawals)
capital at end of month (capital +/- increase/decrease

Question 23

when is it an increase in capital

Answer 23

income > withdrawals (subtract, add totals on the right together)

Question 24

when is it a decrease in capital

Answer 24

income < withdrawals (subtract, subtract totals on the right too)

Question 25

balance sheet

Answer 25

company name
balance sheet
month & year
assets on left side:
cash
accounts receivable
equipment
supplies
total assets
liabilities & owner’s equity on right side:
liabilities:
accounts payable
owner’s equity:
capital
totals = total assets

Question 26

structure of T accounts

Answer 26

left side: title & debit side
right side: account # & credit side

Question 27

balancing an account

Answer 27

add items on each side
subtract the smaller # from larger #
list total on side with larger #

Question 28

increases on debit side

Answer 28

assets, withdrawals, & expenses

Question 29

increases on credit side

Answer 29

liabilities, capital, & revenue

Question 30

ledger

Answer 30

group of accounts that records data from business transactions