Ch. 2 Accounting

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Ledger
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A book of the ACCOUNTS used to record increases and decreases in the accounting system. A group of accounts for a business entity
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Charts of accounts
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A list of accounts in the ledger, the accounts are normally listed in the order in which they appear on the financial statement
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Journalizing
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the process of recording a transaction in the journal
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Intangible assets include patent rights copyright and trademark, they also include accounts receivable prepaid such as insurance buildings equipment Land and cash
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What are some examples of an Asset?
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posting
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the process of transferring the debits and credits from the journal entries to the account
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are often identified on the balance sheet by titles “Payable” and “Unearned”
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How to identify liabilities?
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Fees earned, fares earned, commission revunes, and rent revuene
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What are some examples of revenues?
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Examples of expenses including wages expense, rain expense, utilities expense, supplies expense, and miscellaneous expense
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What are some examples of expenses?
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1. Assets Cash, accounts recievable, supplies, prepaid insurance, land, office equipment 2. Liabilites Accounts payable Unearned rent 3. Stockholders equity Common stock Retained earnings Dividends
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What is included on the balance sheet accounts?
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after the journal entries are posted.
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When are Unadjusted Trial balance prepared?
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4. Revenue Fees earned 5. Expenses Wages expense Supplies expense Rent expense Utilities expense Miscellaneous expense
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What is included on the income statement accounts?
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largest to smallest with miscellaneous last
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How do you list expenses?
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Double entry accounting system
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The system is based on the account equation that requires: every business transaction to be recorded in at least two accounts, the total Deb it’s recorded for each transaction to be equal to the total credit record
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Journal
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Using the rules of the debit and credit transactions are initially into the record called what (a book where the transactions are listed the events in chronological order)
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DEBIT
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what is the left side of the t-account called?
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CREDIT
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what is the right side of the t-account called?
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Increase in debit, decreases in credit
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The normal balance of an asset account is?
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increase in credit, decrease in debit
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The normal balance of a liabilities account is?
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The normal balance of the stockholders’ equity account?
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is the same as the liabilities account because its on the same side of the equation increase in credit, decrease in debit
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adds to stockholders’ equity, therefore the balance is increase in credit, decrease in debit
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The normal balance of revenues?
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subtract from stockholders’ equity, therefore the balance is the same as an asset account, increase in debit, decrease in credit
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The normal balance of Expenses?
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The normal balance of dividends?
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subtracts from stockholders’ equity, therefore the balance is the same as an asset account, increase in debit, decrease in credit
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1. Transaction 2. Journal entry is prepared 3. Transfer information from the journal to the ledger (accounts) – then you post it (T-Accounts). 4. Unadjusted Trial balance
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What are the steps to take in the accounting cycle?
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Transaction
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document is prepared as evidence of the what?
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trial balance
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errors occur in posting debits and credits from the journal to the ledger. One way to detect such as errors is by preparing
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Unadjusted Trial balance
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list every account (with bal) separating the balance into a debit and credit column total the 2 columns to prove they are equal (checking for errors)
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~The excess of the credits of a liability account over the debits is the balance of the account. ~The excess of the credits of a stockholders’ equity account over the debits is the balance of the account.
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what are true about T-accounts?
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a debit to Accounts Payable
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What is the journal entry to pay creditors on account would include?
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in the order in which they occur in the journal.
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How are debits and credits for each journal entry are posted to the accounts?

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