Accounting chapter 1 vocab

asset

anything of value that is owned

liability

an amount owed by a business

owner's equity

the amount remaining after the value of all assets

owner's stockholers' equity

the owners' equity in a corporation

accounting equation

an equation showing the relationship among assets, liabilities, and owners' equity

source documents

business paper from which information is obtained for a journal entry

double-entry accounting

the recording of debit and cred parts of a transaction

journal

a form for recording transactions in chronological order

special journal

a journal used to record only one kind of transaction

account

a record that summarizes all the transactions pertaining to a single item in the accounting equation

ledger

a group of accounts

general ledger

a ledger that contains all accounts needed to prepare financial statements

subsidary ledger

a ledger that is summarized in a single general ledger account

controlling account

an account in a general ledger that summarizes all accounts in a subsidiary ledger

file maintenance

the procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current

departmental accounting system

an accounting system showing accounting information for two or more departments

merchandising business

a business that purchases and sells goods

posting

transferring transaction information from a journal entry to a ledger account

debit memorandum

a form prepared by the customer showing the price deduction taken by the customer for returns and allowances

contra account

an account that reduces a related account on a financial statement

cash discount

A deduction that a vendor allows on the invoice amount to encourage prompt payment

purchases discount

when a company that has purchased merchandise on account takes a cash discount

petty cash

an amount of cash kept on hand and used for making small payments