Chap2

What is the significance of accounting records for large companies?

They are essential for tracking transactions and protecting client funds.

What is a debit?

The left side of an account, indicating an increase in assets or a decrease in liabilities and owner's equity.

What is a credit?

The right side of an account, indicating an increase in liabilities and owner's equity or a decrease in assets.

What is the purpose of the double-entry accounting system?

To ensure that the sum of debits equals the sum of credits, maintaining the balance in the accounting equation.

What does posting refer to in accounting?

The procedure of transferring journal entries to the ledger accounts.

What is a trial balance?

A list of accounts and their balances at a given time, used to prove the equality of debits and credits.

How do increases and decreases differ for asset and liability accounts?

Increases in assets are debited; increases in liabilities are credited.

What is the normal balance of an asset account?

Debit balance.

What is the normal balance of a liability account?

Credit balance.

What should a company do to recover from a trial balance that does not balance?

Identify the difference between total debits and credits and investigate potential errors.

What is a T-account?

A simplified version of an account structure with a title, a left side (debit), and a right side (credit).

What are the basic steps in the recording process of accounting?

Analyze the transaction, enter it into a journal, and then transfer it to the appropriate accounts in the ledger.

What does the accounting equation state?

Assets = Liabilities + Owner’s Equity.

What should be recorded in the journal for each transaction?

The date, accounts involved, debit and credit amounts, and a brief explanation.

What is the effect of owner’s drawings on owner's equity?

They decrease owner’s equity.

How does one prepare a trial balance?

List account titles and balances, total the debit and credit columns, and verify that the totals equal.

What is an abnormal balance in an account?

A balance that does not match the normal expected balance for that type of account.

What happens if a transaction is not journalized?

It may result in a discrepancy in the trial balance, revealing incomplete recordkeeping.

What is journalizing?

The process of recording transaction data in the journal.

Account (Tài Khoản)

A record of increases and decreases in specific asset, liability, or owner's equity items.

Structure of an Account (Cấu Trúc Của Một Tài Khoản)

Consists of a Title (Tên), Debit Side (Bên Nợ), and Credit Side (Bên Có).

Debit (Nợ - Dr)

Indicates the left side of an account; usually increases assets but can decrease liabilities and owner's equity.

Credit (Có - Cr)

Indicates the right side of an account; typically increases liabilities and owner's equity while decreasing assets.

Normal Balance

Determined by whether an account is an asset (normal debit balance) or a liability/equity (normal credit balance).

DEALER Method

A mnemonic for remembering the effects of debits and credits on different account types: Dividends, Expenses, Assets, Liabilities, Owner Equity, Revenues.

Journal (Nhật Ký)

Chronologically records transactions including details on dates, accounts debited and credited, and explanations.

Simple Entries

Journal entries involving just two accounts: one being debited and the other credited.

Compound Entries

Journal entries that involve three or more accounts.

Posting (Chuyển Ghi)

The transfer of journal entries to the ledger, which contains all accounts and provides running balances.

Chart of Accounts (Biểu Đồ Tài Khoản)

A list of account names and numbers to assist in locating accounts in the ledger.

Trial Balance (Bảng Cân Đối)

A summary listing of ledger account balances prepared to ensure that debit and credit columns balance.

Dollar Signs in Accounting

Typically shown only for the first item in a column and the total of the column in trial balances and financial statements.

Underlining in Accounting

A single line indicates figures to be added or subtracted; double underlines indicate final sums.

Compound Entry (Ghi Chép Phức Hợp)

A journal entry that involves three or more accounts.

Double-entry System (Hệ Thống Ghi Chép Kép)

An accounting method that records dual effects on accounts.

Owner’s Capital

Owner’s investment in the business.

Owner’s Drawings

Withdrawals made by the owner from the business.

Accrued Liabilities

Liabilities that have been incurred but not yet paid.

Service Revenue

Revenue earned from providing services.

Supplies Expense

Cost of supplies used during a period.

Depreciation Expense

Cost of using equipment over time.

Insurance Expense

Cost of insurance for a period.

Salaries and Wages Expense

Cost of employee salaries and wages.

Utilities Expense

Cost of utilities like electricity and water.

Interest Expense

Cost of interest on borrowed funds.