Chapter 1
The process of planning, recording, analyzing, and interpreting financial information.
accounting
An amount recorded on the left side of an account.
A form for recording transactions in chronological order.
Journal
The number assigned to an account.
Account Number
A report of deposits, withdrawals, and bank balances sent to a depositor by a bank.
Bank Statement
Anything of value that is owned.
Asset
A list of accounts used by a business.
Chart of Accounts
A business paper from which information is obtained for a journal entry.
Source Document
A ledger that contains all accounts needed to prepare financial statements.
General Ledger
A bank account from which payments can be ordered by a depositor.
Checking Account
An amount owed.
Liability
Amounts to be paid in the future for goods or services already acquired.
Accounts Payable
A business form ordering a bank to pay cash from a bank account.
Check
An entry made when a transaction has been improperly journalized and posted to the ledger.
Correcting Entry
A check that cannot be processed because the maker has made it invalid.
Voided Check
The difference between assets and liabilities.
Equity
Amounts to be received in the future due to the sale of goods or services.
Accounts Receivable
A form describing the goods or services sold, the quantity, the price, and the terms of sale.
Invoice
Transferring information from a journal entry to a ledger account.
Posting
An endorsement restricting further transfer of a check’s ownership.
Restrictive Endorsement
The cost of goods or services used to operate a business.
Expense
The side of an account that is increased.
Normal Balance
A business form giving written acknowledgement for cash received.
Receipt
Determining that the amount of cash agrees with the accounting records.
Proving cash
An endorsement indicating a new owner of a check.
Special Endorsement