The Accounting Cycle

Double entry system

records transactions in accounting books where it has dual effect with at least two accounts for every debit there is credit and their total must be equal

Identifying and analyzing business transaction

where accountants gathers information from source documents and determines the effect of the transactions on the accounts

Journal or Journalizing

a chronological record of events showing all the effected transactions in terms of debit and credit

Simple entry

an entry when only two accounts are affected with one credit and one debit

Compound entry

an entry when it requires the use of three or more accounts

T-account

the simplest form of account because the accounting equation resembles the capital letter T

Account

a form of record summarizes the increase or decrease of any specific accounting value

Components of t-account

1. account title

2. debit and credit

Ledger

the groups of accounts used by the company, a book of final entry

Two accounts in general ledger

balance sheet or nominal accounts

Chart of accounts

list of all account titles used by the company with their corresponding account numbers

Trial Balance

schedule of all balances to prove equality of debit and credit, all account titles are taken from the ledger

Transposition

possible error in the trial balance when order of numbers are reversed

Transplacement or slide

possible error in trial balance when decimal point has been moved or misplaced