Accounting 101 - Chapter 2

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19 terms · Chapter 2

Source Documents

identify and describe transactions and events entering the accounting process.

Account

is a record of increases and decreases in a specific asset, liability, equity, revenue or expense item.

General Ledger / Ledger

is a record containing all accounts used by a company.

Unearned Revenue

refers to a liability that is settled in the future when a company delivers its products or services.

Owner, Capital

When an owner invests in a company, the invested amount is recorded in an account titled Owner, Capital (where the owner's name is inserted in place of "owner")

Owner, Withdrawals

The Owner, Withdrawals account is used to record asset distributions to the owner.

Chart of Accounts

is a list of all accounts a company uses and includes an identification number assigned to each account.

T-Account

represents a ledger account and is a tool used to understand the effects of one or more transactions

L Side of T-Account

Debit (DR)

R Side of T-Account

Credit (Cr2)

Account Balance

The difference between total debits and total credits for an account , including any beginning balance, is the account balance

Double-entry accounting

requires that each transaction affect, and be recorded in, at least two accounts.

Journal

gives a complete record of each transaction in one place.

Journalizing

is the process of recording transactions in a journal.

Posting

The process of transferring journal entry information to the ledger is called posting.

General Journal

can be used to record any transaction and includes the following information about each transaction: (1) date of transaction (2) titles of affected accounts (3) dollar amount of each debit and credit (4) explanation of the transaction.

Posting Reference (PR) column

identification numbers of the individual ledger accounts

Balance column accounts

same as t-account, but includes transaction date and explanation columns.

Trial Balance

is a list of accounts and their balances at a point in time.

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