Foundations & Vocabulary
This is the system a business uses to record, organize, and understand its money.
What is accounting?
This is the period from January 1 to December 31.
What is a calendar year?
In DEALER, these are the three account types that are Debit-normal.
What are Dividends/Withdrawals, Expenses, and Assets?
This is a visual tool shaped like a T used to track increases and decreases in one account.
What is a T-Account?
This is a list of every account and its balance, used to check that total debits equal total credits.
What is a trial balance?
This is any time money moves in or out of a business.
What is a transaction?
This is any 12-month period a business chooses for its own financial reporting.
What is a fiscal year?
In DEALER, these are the three account types that are Credit-normal.
What are Liabilities, Equity, and Revenue?
This is a written record of a transaction showing which account is debited and which is credited.
What is a journal entry?
This is what it means if a trial balance's two columns don't match.
What is an error was made somewhere in recording or posting?
This is the total money a business brings in from sales, before subtracting costs.
What is revenue?
A company's fiscal year starts July 1. This is the fiscal quarter that includes October.
What is Q2?
This is which side of a T-account Cash increases on.
What is the debit side?
This is the process of taking a journal entry and recording it into the correct T-accounts.
What is posting?
Balances given: Cash $3,000 (Dr), Equipment $900 (Dr), Rent Expense $1,500 (Dr), Accounts Payable $700 (Cr), Owner's Capital $3,500 (Cr), Service Revenue $1,200 (Cr). This is whether it balances.
What is yes, both sides total $5,400?
A business's revenue is $45,000 and its expenses are $38,000. This is what happened, and by how much.
What is a profit of $7,000?
This is what you should always ask when someone mentions a "fiscal quarter."
What is whose fiscal year is it, and when does it start?
Accounts Payable decreases. This is which side this is recorded on, and why it's tricky.
What is the debit side, because a decrease is recorded opposite the account's normal balance?
A Cash T-account has these entries: Debit $800, Debit $450, Credit $300. This is the ending balance.
What is $950?
This is the order of the accounting cycle, from a transaction happening to proving the books.
What is Transaction → Journal Entry → Posting to Ledger → Trial Balance?
This is why a business needs a financial record.
What is to track what happened, prove accuracy, and provide a reliable record for taxes and decisions?
This is the difference between a "financial quarter" and a "fiscal quarter."
What is a financial quarter is the general term, while a fiscal quarter depends on a company's own fiscal year start date?
This is the bookkeeping system that says every entry must have an opposite, corresponding entry in a different account.
What is double-entry accounting?
This is the difference between journalizing a transaction and posting it.
What is journalizing writes the entry down, while posting transfers it into the ledger?
This is why preparing a trial balance is proof, not just a formality.
What is it mathematically confirms every debit was matched by an equal credit?