Ch 3 Vocabulary Flashcards
(13 cards)
Account
An individual accounting record of increases and decreases in a specific asset, liability, or shareholder’s equity item p 114
Accounting cycle
A series of nine steps followed by accountants to record transactions and prepare financial statements. The first four steps were introduced in this chapter: analyzing transactions ( step 1), journalizing transactions (step 2), posting transactions (step 3), and preparing a trial balance (step 4). p 118
Accounting information system
The system of collecting and processing transaction data and communicating financial information to interested parties. p 106
Accounting transaction
An economic event that is recorded in the financial statements because it involves an exchange that affects assets, liabilities, or shareholders’ equity. p 106
Chart of accounts
a list of a company’s accounts and account numbers that identify where the accounts are in the general ledger. p 121
Credit
The right side of an account p 115
Debit
The left side of an account p 115
Double-entry accounting system
A system that records the dual effect of each transaction in appropriate accounts. p 115
General journal
The book of original entry in which transactions are recorded in chronological order. p 119
General ledger
The book of accounts that contains a company’s asset, liability, and shareholders’ equity, revenue, and expense accounts. p 121
Posting
The procedure of transferring journal entries to the general ledger accounts. p 122
T account
(also known as a general ledger 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. p 114
Trial balance
A list of general ledger accounts and their balances at a specific time, usually at the end of the accounting period. p 130
