| Term | Definition |
|---|
| double-entry accounting | This is a financial recordkeeping system in which each business transaction affects at least two accounts. |
| ledger | This is a book where the accounts used by a business are kept on separate pages or cards. |
| credit | This is an entry on the right side of the T account. |
| temporary capital accounts | The revenue, expense, and withdrawals accounts are examples of these. |
| debit | This is an entry on the left side of the T account. |
| sources document | This a paper that serves evidence that a transaction occurred. |
| correcting entry | This is required after an error discovered after posting has taken place. |
| calendar year | This is an accounting period that begins on January 1 and ends on December 31. |
| chart of accounts | This is a list of all the accounts used by a business when journalizing its transactions. |
| permanent accounts | These are accounts whose balances are carried from one accounting period to the next. |
| fiscal year | This is an accounting period that lasts 12 months and ends on the last day of a month other than December. |
| accounting cycle | This is the full range of accounting activities a business must complete to keep its accounting records in an orderly fashion. |
| general journal | This is an all-purpose chronological record used for recording a business's transactions. |
| journalizing | This is the process of recording business transactions in a journal. |
| posting | This is the step in the accounting cycle where information is transferred from a journal entry to an individual account. |
| normal balance | This is the same as the increase side of an account. |
| T account | This is a tool used to analyze a business transaction's effect on an account. |
| revenue recognition | According to this principle, revenue is recorded on the date it is earned even if cash has not been received on that date. |
| general ledger | This is what the ledger is often called whether accounts are kept manually in a special book or on magnetic disks or tapes. |
| assets | These are things of value owned by a business. |
| capital | This represents any investment in a business by an owner. |
| property | This is anything of value that is owned or controlled by an individual or business organization. |
| owner's equity | This is the owner's claims to the total assets of the business. |
| accounting equation | This states that the assets of the business are equal the liabilities plus the owner's equity. |
| business transaction | This is an economic event that causes a change in the assets, liabilities,or owner's equity of a business. |
| liabilities | These are the debts of a business. |
| account | This is a record showing the increases or decreases, as well as the balance, of a specific asset, liability, or equity. |
| accounts receivable | This is the total amount of money to be received in the future for goods or services sold on credit. |
| revenue | This is income earned from the sale of goods or services. |
| withdrawal | This is when an owner takes cash or other assets from the business for personal use. |
| expenses | These are the prices paid for goods or services used to operate the business. |
| financial claims | These are legal rights to property that is owned. |
| equity | This is total financial claims to the assets of a business. |
| creditor | This is what business or person selling you property on credit is called. |
| on account | This us the term is used to indicate that a business bought something on credit. |
| accounts payable | This is the total amount of money owed to a business's creditors. |
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