Basic Accounting Terms 4

Basic Accounting Terms 4 – Chapter 2

This chapter 2 includes introduction to accounting, basic accounting terms 4, double entry accounting, chart of accounts.


accounts

the basic summary device of accounting; the detailed record of all the changes in a specific asset, liability, or stockholder’s equity item as a result of transactions


chart of accounts

a list of all the accounts of a business and the numbers assigned to those accounts


double entry accounting

the rule of accounting that specifies every transaction involves at least two accounts and is recorded with equal amounts of debits and credits


debit

left side of any account


credit

right side of any account


t-account

an informal account form used to summarize transactions where the top of the T holds the account title and the base divides the debit and credit sides of the account


normal balance

the balance that appears on the side of an account where increases are recorded; the expected balance of an account


general journal

the chronological accounting record of the transactions of a business


record/journalizing

entering in a journal


transaction

an event that has a financial impact on a business entity


general ledger

the accounting record summarizing, in accounts, the transactions of a business and showing the resulting ending account balances


posting

copying information from the general journal to accounts in the general ledger


posting reference

a notation in the journal and ledger that links these two accounting records together


trial balance

a list of all the accounts of a business and their balances; its purpose is to verify that total debits equal total credits


accounting period

the time period reflected by a set of financial statements


accounting cycle

the sequence of steps used to record and report business transactions


double entry accounting

the rule of accounting that specifies every transaction involves at least two accounts and is recorded with equal amounts of debits and credits


general ledger

the accounting record summarizing, in accounts, the transactions of a business and showing the resulting ending account balances


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