Accounting Equation
This fundamental equation states that Assets equal Liabilities plus this category.
What is Owner's Equity
In accounting terminology, this word simply means the left side of a T-account.
What is a Debit?
This term describes the side of a T-account (debit or credit) where an increase in that specific account is recorded.
What is a Normal Balance?
This is the complete master list of all account names and numbers used by a business to record transactions
What is the chart of accounts?
When a business purchases equipment using cash, the Equipment account increases, and this account decreases.
What is cash?
This fundamental equation states that Assets equal Liabilities plus this category.
What are Assets?
In accounting terminology, this word simply means the right side of a T-account.
What is a Credit?
Cash, Accounts Receivable, and Supplies all share this specific normal balance side.
What is a debit balance?
n standard numbering systems, accounts starting with the number 1 (like 101 or 110) belong to this classification.
What are assets?
This phrase describes buying an asset immediately but agreeing to pay for it later, which creates an Accounts Payable liability.
What is on account?
This represents the debts or obligations that a business owes to outside creditors.
What are Liabilities?
To increase an Asset account, you must apply this type of entry.
What is a debit?
Cash, Accounts Receivable, and Supplies all share this specific normal balance side.
What is a debit balance?
: In standard numbering systems, accounts starting with the number 2 (like 201) belong to this classification.
What are liabilities?
When a business performs services and receives cash immediately, Cash is debited and this account is credited
What is service revenue?
If a business has $50,000 in Assets and $20,000 in Liabilities, this is the total amount of Owner's Equity.
What is $30,000.00
To increase a Liability or an Owner's Capital account, you must apply this type of entry.
What is a credit?
While most Equity accounts have a normal credit balance, these two types of accounts have a normal debit balance because they decrease overall equity.
What are expenses and withdrawls?
This is the specific reason why a Chart of Accounts uses numbers instead of just names.
What is to keep accounts organized and easily searchable (especially in computerized accounting systems)?
When a business pays its monthly utility bill, Utilities Expense is debited and this account is credited.
What is cash?
This specific sub-category of Equity represents the money or assets an owner takes out of the business for personal use.
What is a withdrawl?
: Because of this core rule, every single financial transaction must have at least one debit and one credit that perfectly equal each other.
What is double entry book keeping?
This is the normal balance side for the Fees Earned or Sales Revenue accounts.
What is a credit balance?
: These types of accounts (Revenue and Expenses) are found at the very end of the Chart of Accounts sequence, typically numbered in the 400s and 500s.
What are temporary accounts? (AKA Income Statement Accounts)
When a business pays off a debt it owed to a supplier, this liability account is debited to decrease it
What is accounts payable?