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23 terms

Accounting Chp 2

Vocab
STUDY
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T account
The simplest form of an account.
Debit
amounts entered on the left side of an account.
Credit
amounts entered on the right side of an account.
Balance of the account
The amount of the difference between the debits and the credits that have been entered into an account.
Ledger
A group of accounts for a business.
Chart of accounts
A list of the accounts in the ledger.
Capital account
An account used for a proprietorship that represents the owner's equity.
Drawing
The account used to record amounts withdrawn by an owner of a proprietorship.
Double-entry accounting system
A system of accounting for recording transactions, based on recording increases and decreases in accounts so that debits equal credits.
Rules of debit and credit
In the double-entry accounting system, specific rules for recording debits and credits based on the type of account.
Normal balance of an account
The normal balance of an account can be either a debit or a credit depending on whether increases in the account are recorded as debits or credits.
Journal
The initial record in which the effects of a transaction are recorded.
Journalizing
The process of recording a transaction in the journal.
Journal Entry
The form of recording a transaction in a journal.
Unearned revenue
The liability created by receiving revenue in advance.
Trial balance
A summary listing of the titles and balances of accounts in the ledger.
Unadjusted trial balance
A summary listing of the titles and balances of accounts in the ledger prior to the posting of adjusting entries.
Transposition
An error in which the order of the digits is changed, such as writing $542 as $452 or $524.
Slide
An error in which the entire number is moved one or more spaces to the right or the left, such as writing $542.00 as $54.20 or $5,420.00.
Correcting journal entry
An entry that is prepared when an error has already been journalized and posted.
Horizontal analysis
Financial analysis that compares an item in a current statement with the same item in prior statements.
Posting
The process of transferring the debits and credits from the journal entries to the accounts.
account
An accounting form that is used to record the increases and decreases in each financial statement.