Account: A detailed record of all increases and decreases that have occurred in an individual asset, liability, or equity during a specific period.

Accrued Liability: A liability for which the business knows the amount owed, but the bill has not been paid.

Chart of Accounts: A list of all of a company’s accounts with their account numbers.

Compound Journal Entry: A journal entry that is characterized by having multiple debits and/or multiple credits.

Credit: The right side of a T-account

Debit: The left side of a T-account.

Debt Ratio: Shows the proportion of assets financed with debt. Total liabilities / Total assets.

Double-Entry System: A system of accounting in which every transaction affects at least two accounts.

Journal: A record of transactions in date order

Ledger: The record holding all the accounts of a business, the changes in those accounts, and their balances.

Normal Balance: The balance that appears on the increase side of an account.

Notes Payable: A written promise made by the business to pay a debt, usually involving interest, in the future.

Notes Receivable: A written promise that a customer will pay a fixed amount of principal plus interest by a certain date in the future.

Posting: Transferring data from the journal to the ledger.

Prepaid Expense: A payment of an expense in advance.

Source Document: Provides the evidence and data for accounting transactions.

T-Account: A summary device that is shaped like a capital T with debits posted on the left side of the vertical line and credits on the right side of the vertical line.

Trial Balance: A list of all ledger accounts with their balances at a point in time.

Unearned Revenue: A liability created when a business collects cash from customers in advance of providing services or delivering goods.