Chapter 2 (Horngren’s Accounting 11th Edition) – Flashcards
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Account
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A detailed record of all increases and decreases that have occurred in an individual asset, liability, or equity during a specific period.
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Accrued Liability
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A liability for which the business knows the amount owed but the bill has not been paid.
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Notes Payable
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A written promise made by the business to pay a debt, usually involving interest, in the future.
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Notes Receivable
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A written promise that a customer will pay a fixed amount of principal plus interest by a certain date in the future.
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Prepaid Expense
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A payment of an expense in advance.
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Unearned Revenue
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A liability created when a business collects cash from customers in advance of providing services or delivering goods.
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Chart of Accounts
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A list of all of a company's accounts with their account numbers.
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Ledger
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The record holding all the accounts of a business, the changes in those accounts, and their balances.
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Credit
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The right side of a T-account.
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Debit
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The left side of a T-account.
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Double-Entry System
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A system of accounting in which every transaction affects at least two accounts.
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T-Account
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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.
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Normal Balance
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The balance that appears on the increase side of an account.
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Source Document
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Provides the evidence and data for accounting transactions.
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Journal
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A record of transactions in date order.
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Posting
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Transferring data from the journal to the ledger.
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Compound Journal Entry
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A journal entry that is characterized by having multiple debits and/or multiple credits.
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Trial Balance
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A list of all ledger accounts with their balances at a point in time.
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Debt Ratio
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Shows the proportion of assets financed with debt. Total liabilities / Total assets.
