Journalizing, Posting, and Trial Balance

Vocabulary flashcards covering the key concepts, definitions, and procedures of transaction analysis, journalizing, posting, and the accounting cycle.

Accounting Cycle

A series of sequential steps or procedures performed to accomplish the accounting process throughout an accounting period.

Transaction Analysis

A four-step process involving the identification of transactions from source documents, determination of affected accounts, assessment of increases or decreases, and application of debit and credit rules.

Source Documents

Original written evidences that identify and describe transactions and events entering the accounting process, providing the bases for journal entries.

Journal

A chronological record of an entity's transactions showing all effects in terms of debits and credits, known as the book of original entry.

Books of Accounts

The records used and kept by a business to store accounting data, consisting of books of original entry and books of final entry.

Book of Original Entry

A record, specifically the general journal or special journal, where business transactions are recorded for the first time.

Book of Final Entry

A record, specifically the general ledger or subsidiary ledger, where transactions recorded in the journal are transferred for final recording.

Ledger

A group of accounts used to classify and summarize transactions and to prepare data for basic financial statements.

Posting

The process of transferring amounts and information from the general journal to the appropriate accounts in the ledger.

Cash Basis

An accounting method where income is recognized only when cash is actually received and expenses are recognized only when cash is actually paid.

Accrual Basis

An accounting method where income is recorded when earned regardless of cash receipt, and expenses are recorded when incurred regardless of payment.

Chart of Accounts

A prepared listing of account titles and numbers that guides bookkeepers and accountants on what specific accounts to use when recording transactions.

Posting Reference (P.R.)

A column in the journal used to record the ledger account number once an entry has been posted, indicating the transfer is complete.

Simple Journal Entry

A journal entry consisting of exactly one debit item with a debit amount and one credit item with a credit amount.

Compound Journal Entry

A journal entry that contains two or more debit items, two or more credit items, or multiple items on both sides.

Permanent Accounts

Balance sheet accounts comprising assets, liabilities, and owner's equity that carry their balances forward into subsequent accounting periods.

Temporary Accounts

Nominal or income statement accounts (revenues and expenses) used to accumulate data for a specific period before being closed to owner's equity.

Footing

The procedure of adding the total debits and the total credits of an individual ledger account to determine its balance.

Debit Balance

The condition of an account when the sum of its debits exceeds the sum of its credits.

Credit Balance

The condition of an account when the sum of its credits exceeds the sum of its debits.

Trial Balance

A listing of all ledger accounts in order with their debit or credit balances, prepared to verify the equality of debits and credits in the ledger.

Post-Closing Trial Balance

A listing of accounts prepared after closing entries are posted to verify the equality of debits and credits among remaining permanent accounts.

Reversing Journal Entries

Optional entries journalized and posted at the beginning of the next accounting period to simplify the recording of certain regular transactions.