Chapter 4 Flashcards
Simple Ledger Terminology
ledger
group of accounts; a.k.a “the books”
T-account
used to record business transcations
debit
left side of account; assets are written on this side
credit
right side of account, liabilities and owner’s quity is written on this side
double-entry system of accounting
where every transcation is recorded in two accounts
pin totals/pencil footings
the total calcualted from t-accounts
bank overdraft
the limit you can go in the negative of your bank account that the bank can cover
exceptional account balance
the opposite balance of what it should be (e.g. an total asset account is on credit not debit)
“sale on account”
you performed a service for a customer but they haven’t paid you yet (A/R and capital)
“receipt on account”
an accounts receivable is paying you the amount owed (bank and A/R)
“purchase on account”
you buy assets (e.g. supplies, equipment etc.) from a supplier but you don’t pay yet (A/P and assets/capital - expenses)
“payment on account”
you pay the amount owed to the accounts payable (A/P and bank)
“____ on account”
“on credit” or no paid yet
trial balance
to make sure the sum of the debits is equal to the sum of the credits
ledger order
assets, liabilities, capital, drawings, revenue, expenses
All Lions Can Draw Red Elephants
