Chapter 2: Recording of Business Transactions - Journal and Ledger

This set of vocabulary flashcards covers the fundamental concepts of accounting records, focusing on the distinct roles of the journal and the ledger in the accounting cycle.

Business Transactions

Economic events or exchanges of value that the accounting process identifies and records.

Voucher

A source document or evidentiary record used to identify and prepare entries for business transactions.

Double-Entry Book-Keeping System

An accounting method that records the dual effect of each transaction, involving a corresponding debit and credit for every entry.

Accounting Equation

The fundamental relationship in accounting where assets always equal the sum of liabilities and owner's equity.

Account

A systematic record of the increases and decreases in a specific asset, liability, equity, revenue, or expense item.

Golden Rules of Debit and Credit

The basic principles governing accounting entries based on the classification of accounts as personal, real, or nominal.

Journal

The primary book of entries where transactions are first recorded chronologically, representing the first step in the accounting cycle.

Journalising

The actual process of recording business transactions into the journal.

Ledger

The principal book of accounts where entries from the journal are classified and summarized, known as the second step in the accounting cycle.

Ledger Posting

The technical process of transferring entry information from the journal to the specific account pages in the ledger.