Flashcards in Unit 6-8 Deck (20)
what is journalizing?
The recording of transactions in a journal
what are the four parts of a journal entry?
date of transaction
the account debited and the amount
the account credited and the amount (indented)
and explanation giving details of the transaction
what are three advantages of the journal?
The complete transaction is recorded in one place
errors are easier to spot
what is a journal entry?
A journal entry is a transaction recorded in a journal
what is double entry accounting?
each debit amount must have an equal credit amount
what is the general ledger?
The letter is a group of accounts. Each account shows a complete up-to-date record of all transactions affecting only that particular account
what is posting?
posting is the process of transferring information to the ledger from the Journal
why are T-accounts not used?
they are not very practical, there is less chance of error in the balance column form of account than a T-account
what is the chart of accounts?
A list of the ledger account names and numbers
what are the steps in posting to the ledger?
record the date
enter the amount
calculate the new balance
complete the ledger PR column
complete the journal PR column
what are posting references?
posting references link journal entries to postings in the ledger
what is an audit?
A systematic check of accounting records and procedures by an accountant
what is an opening entry?
The opening entry records the assets, liabilities, and owners equity when a business first begins operations
what is a compound entry?
A complementary has more than one debit or more than one credit
what is a trial balance?
The trial balance is a test, or trial, to prove that the ledger is mathematically in balance
what is the accounting cycle
The set of accounting procedures performed in each accounting period
what are source documents?
any business for that serves as the original source of information that the transaction has occurred
example a sales slip
why are source documents prenumbered?
they're numbered to prevent errors and losses
what is the principle of objectivity?
requires objective evidence to support the value used to record transactions