Ch3 Flashcard

Account

An individual accounting record of increases and decreases in a specific asset, liability, and/or shareholders' equity item.

Accounting cycle

A series of nine steps used to account for and report transactions.

Accounting information system

The system of collecting and processing transaction data and communicating financial information to decision-makers.

Accounting transaction

An economic event that is recorded in the financial statements because it involves an exchange that affects assets, liabilities, and/or shareholders' equity.

Chart of accounts

A list of a company's accounts and account numbers that identify where the accounts are in the general ledger.

Credit

The right-hand side of an account.

Debit

The left-hand side of an account.

Double-entry accounting system

A system that records the dual effect of each transaction in appropriate accounts.

General journal

The book of original entry in which transactions are recorded in chronological (date) order.

General ledger

The book of accounts that contains a company's asset, liability, and shareholders' equity accounts.

Normal balance

The side of an account used to increase the account.

Posting

The procedure of transferring journal entries to the general ledger accounts.

T account

The basic form of an account, with a debit (left) side and a credit (right) side showing the effect of transactions on the account.

Trial balance

A list of general ledger accounts and their balances at a specific time.