Cash-Debit-Credit-Accounts-Source Documents-Journal

Vocabulary flashcards defining fundamental accounting concepts, account types, transactions, and source documents.

Cash

Money in the form of currency, coins, checks, or bank account balances available for immediate use.

Asset

Anything of value that is owned by a business.

Liability

An amount owed by a business to an outside creditor.

Owner's equity

The owner's financial claim to the assets of the business after liabilities are subtracted.

Capital

The account used to record the owner's investment and equity in the business.

Drawing

The account used to record assets taken out of the business by the owner for personal use.

Supplies

Short-term items purchased for daily operations that will be consumed over time (an asset until used).

Prepaid insurance

Insurance coverage paid for in advance, representing a future economic benefit (an asset).

Rent expense

The cost incurred for renting office space, equipment, or facilities during an accounting period.

Sales

The revenue account used to record earnings from selling goods or services to customers.

T-account

A simplified skeleton layout shaped like a capital letter, used to demonstrate debit and credit entries.

Debit

An entry recorded on the left side of an account.

Credit

An entry recorded on the right side of an account.

Left side

The standard position on a T-account where debits are always entered.

Right side

The standard position on a T-account where credits are always entered.

Account classification

Categorizing an account into its broad structural group (Asset, Liability, Owner's Equity, Revenue, or Expense).

Accounts receivable

Money owed to the business by customers who purchased goods or services on credit (an asset).

Accounts payable

Money owed by the business to suppliers or vendors for purchases made on credit (a liability).

On account

Purchasing or selling goods and services with an agreement to pay or receive payment at a later date rather than using cash immediately.

Journal

The book or electronic record where accounting transactions are first recorded in chronological order.

Entry

A formal accounting record of a single transaction made in a journal or ledger.

Source document

A business paper or document that provides the original evidence and details of a financial transaction.

Check

A written order directing a bank to pay a specific sum of money from an account to a named recipient.

Invoice

A detailed bill sent to a customer (or received from a vendor) showing items sold, costs, and terms of payment.

Receipt

A written acknowledgment that cash or payment has been received.