Chapter 3: Recording Transactions Flashcards
Accumulated Depreciation
The cumulative sum of all depreciation recognized since the date of acquisition of an asset (p. 105)
Allowance for Depreciation
See Accumulated Depreciation
Balance
A numerical total that is the net result of all activity recorded in an account as of a particular point in time. In a T-account the balance is the difference between the total left side and right side amounts in the T-account at any particular time. The balance in a general ledger account at the end of an accounting period is computed as the beginning balance in the account, plus the amount of the increases in the account during the period, minus the amount of the decreases (p. 92)
Book of Original Entry
Another name for the general journal (p. 96)
Book Value
The balance of an account shown on the books minus the value of any associated contra accounts. For example, the book value of equipment is its acquisition cost minus accumulated depreciation (p. 105)
Carrying Amount
See Book Value
Carrying Value
See Book Value
Charge
A word often used instead of debit (p. 95)
Chart of Accounts
A numbered or coded list of all account titles (p. 96)
Close the Books
To transfer the balances in all revenue and expense accounts to retained earnings, which resets the revenue and expense accounts to zero so that they are ready to record the next period’s transactions (p. 110)
Closing Entries
Journal entries that transfer balances in the “temporary” stockholders’ equity accounts (revenue and expense accounts) to the “permanent” stockholders’ equity account, Retained Earnings (p. 110)
Compound Entry
A transaction that affects more than two accounts (p. 13)
Contra Account
A separate but related account that offsets or is a deduction from a companion account. An example is accumulated depreciation (p. 105)
Contra Asset
A contra account whose companion account is an asset. A contra asset account has a credit balance. We deduct the balance in the contra asset from an asset account (p. 105)
Correcting Entry
A journal entry that cancels a previous erroneous entry and adds the correct amounts to the correct accounts (p. 116)
Credit
An entry or balance on the right side of any account (p. 95)
Cross Referencing
The process of using numbering, dating, and/or some other form of identification to relate each general ledger posting to the appropriate journal entry (p. 99)
Data Processing
The procedure used to record, analyze, store, and report on chosen activities (p. 119)
Debit
An entry or balance on the left side of any account (p. 95)
Double Entry System
The method usually followed for recording transactions, whereby every transaction affects at least two accounts (p. 92)
General Journal
A complete chronological record of an organization’s transactions and how each transaction affects the balances in particular accounts (p. 92)
General Ledger
The collection of all ledger accounts that supports an organization’s financial statements (p. 92)
Journal Entry
An analysis of the effects of a transaction on the various accounts, usually accompanied by an explanation (p. 97)
Journalizing
The process of entering transactions into the general journal (p. 97)
