Ch 3 - Analyzing Bus Trans VOCAB

Question 1

Define account balance.

Answer 1

difference between the amounts recorded on the two sides of an account

Question 2

Define accounts.

Answer 2

written records of the assets, liabilities, and owner’s equity of a business

Question 3

Define chart of accounts.

Answer 3

list of the accounts used by a business to record its financial transactions

Question 4

Define classification.

Answer 4

means of identifying each account as an asset, liability or owner’s equity

Question 5

Define credit.

Answer 5

entry on the right side of an account

Question 6

Define debit.

Answer 6

entry on the left side of the account

Question 7

Define double-entry system.

Answer 7

accounting system that involves recording the effects of each transaction as debits and credits

Question 8

Define drawing account.

Answer 8

special type of owner’s equity account set up to record the owner’s withdrawal of cash from the business

Question 9

Define footing.

Answer 9

small pencil figure written at the bottom of an amount column showing the sum of the entries in the column

Question 10

Define normal balance.

Answer 10

the increase side of an account

Question 11

Define permanent account.

Answer 11

an account that is kept open from one accounting period to the next

Question 12

Define slide.

Answer 12

an accounting error involving a misplaced decimal point

Question 13

Define T Account.

Answer 13

type of account, resembling a T, used to analyze the effects of a business transaction

Question 14

Define temporary account.

Answer 14

account whose balance is transferred to another account at the end of an accounting period.

Question 15

Define transposition.

Answer 15

an accounting error involving misplaced digits in a number.

Question 16

Define trial balance.

Answer 16

a statement to test the accuracy of total debits and credits after transactions have been recorded.