College Accounting Chapter 3 Analyzing Business Transactions Using T Accounts – Flashcards
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accounting equation
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assets = liabilities + owner's equity
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easy way to remember rules for debits and credits
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assets are on the left side of the equal sign--assets normal balance is on the left side of the T account liabilities and owners equity are on the right side of the equals sign--liabilities and owners equity's normal balances are on the right side of the T account
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account balance
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Difference between total debits and total credits (including the beginning balance) for an account.
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accounts
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written records of the assets, liabilities, and owner's equity of a business
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chart of accounts
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a list of the accounts used by a business to record its financial transactions
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classification
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a means of identifying each account as an asset, liability, or owner's equity
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credit
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an entry on the right side of an account
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debit
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an entry on the left side of an account
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drawing account
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a special type of owner's equity account set up to record the owner's withdrawal of cash from the business
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normal balance
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the increase side of the account
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permanent account
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an account that is kept open from one accounting period to the next
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slide
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an accounting error involving misplacing decimals (e.g., 500 & 5.00)
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T account
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a type of account, resembling a T, used to analyze the effects of a business transaction
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temporary account
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an account whose balance is transferred to another account at the end of an accounting period
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transposition
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an accounting error involving misplacing digits in a number (e.g., 357 & 375)
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trial balance
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a statement to test the accuracy of total debits and credits after transactions have been recorded
