Chapter 3 Flashcards
Asset account’s normally have a
debit balance.
Liabilities and shareholders’ equity accounts normally have a
credit balance.
An account’s normal balance is used to
increase it.
•The opposite of an account’s normal balance is used to
decrease it.
•Cash is an asset. It is on the left side of the T and, therefore, it normally has a _____ balance.
Therefore, to record an increase in the Cash account, we would _____.
To record a decrease, we would do the opposite: we would ______. At the end of a period, when we tally up the debits and credits, we would expect there to be _________________, because this account normally has a debit balance.
a) debit
b) debit it
c) credit it
d) more debits than credits
Accounts payable is a liability. It is on right side of the T and, therefore, it normally has__________. Therefore, to record an increase in the Accounts Payable account, we would ________. To record a decrease, we would do the opposite: we would ________. At the end of a period, when we tally up the debits and credits, we would expect there to be _____________, because this account normally has a credit balance.
a) a credit balance
b) credit it
c) debit it
d) more credits than debits
general ledger
the financial records containing details on a company’s asset, liabilities, s/h equity, revenue, expense accounts
general ledger account
an account in the general ledger
Retained Earnings normally have a __________ balance
credit
•Revenue accounts will normally have a
credit balance
( because revenue accounts increase Retained Earnings and Retained Earnings normally has a credit balance, so it must be credited to increase it. )
•Expense accounts will normally have a
debit balance
( because expense accounts decrease Retained Earnings and Retained Earnings normally has a credit balance, so it must be debited to decrease it. )
Dividends Declared will normally have a
debit balance
( because Dividends Declared decreases Retained Earnings and Retained Earnings normally has a credit balance, so it must be debited to decrease it. )
The list of all of a company’s accounts is known as its
chart of accounts
permanent account
any account that has a balance that carries over from one accounting period to the next ( usually any statement of financial position)
temporary accounts
revenues, expenses —- tracked period to period – also true with dividends declared — will reset balances to 0 when starting next period
Assets, liabilities, and shareholders equity are
a) permanent accounts
b) temporary accounts
a) permanent accounts
Revenue and expenses are
a) permanent accounts
b) temporary accounts
b)temporary accounts
Transactions are initially recorded in the_____
Subsequently, they are posted to the_____
general journal.
general ledger.
The general journal contains ________ information on each _______
detailed
transaction.
The general ledger contains _________ information for each _________
summary
account.
The __________ is a listing of all the account balances in the general ledger at a specific point in time
trial balance
adjusting entries and are classified into two broad categories:
accruals and deferrals.
_________are required when a company needs to recognize a revenue or expense before the receipt or payment of cash
Accruals
______ are required when a company needs to recognize a revenue or expense in an accounting period after the cash has been received or paid
Deferrals
