ACCOUNTING CH.2

balance of the account

The amount of the difference between the debits and the credits that have been entered into an account.

chart of accounts

A list of the accounts in the ledger.

correcting journal entry

An entry that is prepared to correct an error to an entry that has already been journalized and posted.

double-entry accounting system

A system of accounting for recording transactions, based on recording increases and decreases in accounts so that debits equal credits.

horizontal analysis

Financial analysis that compares an item in a current statement with the same item in prior statements in terms of the amount and percentage of change.

journal

The initial record in which the effects of a transaction are recorded.

journal entry

The record of a transaction entered in a journal, made up of at least one debit and one credit

ledger

A group of accounts for a business.

normal balance of an account

The side of an account (debit or credit) in which the balance normally appears based on the type of account and whether it is increased by debits or credits.

posting

The process of transferring the debits and credits from the journal entries to the accounts.

slide

An error in which the entire number is moved one or more spaces to the right or the left, such as writing $542.00 as $54.20 or $5,420.00.

transposition

An error in which the order of the digits is changed, such as writing $542 as $452 or $524.

trial balance

A summary listing of the titles and balances of accounts in the ledger, which is used to verify that debits equal credits.

unearned revenue

The liability created by receiving a cash payment in advance of providing a service.

A debit may signify a(n):

increase in an asset account.

The type of account with a normal credit balance is

revenue -

A debit balance in which of the following accounts would indicate a likely error?

Fees Earned

The receipt of cash from customers in payment of their accounts would be recorded by:

a debit to Cash and a credit to Accounts Receivable.

The form listing the titles and balances of the accounts in the ledger on a given date is the:

trial balance.

@Accounts Receivable

Debit and credit entries, normal debit balance

@Commissions Earned

Credit entries only, normal credit balance

@Notes Payable

Debit and credit entries, normal credit balance

@Common Stock

Credit entries only, normal credit balance

@Rent Revenue

Credit entries only, normal credit balance

@Wages Expense

Debit entries only, normal debit balance