accounting chapter 4 and 5 combined study guide

accounting name

what goes at the top of a T account?

right

are credits entered on the left or right side of a T account?

left

are debits entered on the left or right side of a T account?

no it means left

does debit always mean increase?

no it means right

does credit always mean decrease?

yes

does every transaction have to have equal amounts of debits and credits?

balanced

the accounting equation has to be _________

ledgers

businesses group their accounts in _________

one must increase and one must decrease

how can a transaction affect two accounts on the same side of the accounting equation and still be balanced?

no limit

what is the account limit for a chart of accounts?

t account

a tool used to analyze a business transactions effect on an account

debit

the amount entered on the left side of an account

double entry accounting

requires a debit and a credit for each transaction

normal balance

the increase side of an account

credit

the amount entered on the right side of an account

chart of accounts

an official list of all of the accounts used by a business to record it transactions

decrease

expenses __________ owners equity

yes

are the rules for debit and credit for expense accounts the same as the rules for asset accounts?

easier to make better financial decisions and compare them

why should a business have seperate accounts for recording revenue and expenses?

debit

expenses are always _________

decreases

the withdrawal of cash by the owner of the business ___________ owners equity

yes

is it true that expenses have the opposite effect of revenue on the capital account?

the balance that they ended the previous cycle with

Permanent accounts start each accounting period with what kind of balance?

zero

temporary accounts start each accounting period with what kind of balance?

capital, assets, liabilities

list all permanent accounts:

revenue, expenses, drawing

list all temporary accounts:

credits

debits must always equal ___________

expenses

the cost of doing business/the cost of keeping the business in operation

temporary

the balance of this type of account does not carry forward from one period to the next

revenue

money a business earns from the sale of goods and services

permanent

the balance of this type of account is carried forward from one period to the next

withdrawal

this occurs when the owner takes assets out of the business for personal use