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Record within an accounting system in which increases and decreases are entered and stored in a specific asset, liability, equity, revenue, or expense.

Account Balance

Difference between total debits and total credits (including the beginning balance) for an account.

Balance Column Account

Account with debit and credit columns for recording entries and another column for showing the balance of the account after each entry.

Chart of Accounts

List of accounts used by a company; includes an identification number for each account.

Compound Journal Entry

Journal entry that affects at least three accounts.


Recorded on the right side; an entry that decreases asset and expense accounts, and increases liability, revenue, and most equity accounts; abbreviated Cr.


Individuals or organizations entitled to receive payments.


Recorded on the left side; an entry that increases asset and expense accounts, and decreases liability, revenue, and most equity accounts; abbreviated Dr.

Debt Ratio

Ratio of total liabilities to total assets; used to reflect risk associated with a company's debts.

Double Entry Accounting

Accounting system in which each transaction affects at least two accounts and has at least one debit and one credit.

General Journal

All-purpose journal for recording the debits and credits of transactions and events.


Record in which transactions are entered before they are posted to ledger accounts; also called book of original entry.


Process of recording transactions in a journal


Record containing all accounts (with amounts) for a business; also called general ledger.

Owner, Capital

Account showing the owner's claim on company assets; equals owner investments plus net income (or less net losses) minus owner withdrawals since the company's inception; also referred to as equity.


Process of transferring journal entry information to the ledger; computerized systems automate this process.

Posting (PR) Reference

A column in journals in which individual ledger account numbers are entered when entries are posted to those ledger accounts.

Source Documents

Source of information for accounting entries that can be in either paper or electronic form; also called business papers.


Tool used to show the effects of transactions and events on individual accounts.

Trial Balance

List of accounts and their balances at a point in time; total debit balances equal total credit balances.

Unearned Revenue

Liability created when customers pay in advance for products or services; earned when the products or services are later delivered

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