Chapter 1
Asset
Anything of value that is owned.
T account
An accounting device used to analyze transactions.
journal
A form for recording transactions in chronological order.
Ledger
A group of accounts.
Checking account
A bank account from which payments can be ordered by a depositor.
Liability
An amount that is owed
Debit & Credit
debit is on the left side and credit is on the right side
Entry
Information for each transaction recorded in a journal.
Account number
The number assigned to an account.
Deposit slip
A bank form which lists the checks, currency, and coins an account holder is adding to a bank account.
Account
A record that summarizes all the transactions pertaining to a single item in the account
Normal balance
The side of an account that is increased is called the normal balance of the account.
Receipt
A business form giving written acknowledgement for cash received.
Posting
Transferring information from a journal entry to a ledger account.
Endorsment
A signature or stamp on the back of a check transferring ownership.
Net worth statement
A formal report that shows what an individual owns, what an individual owes, and the difference between the two.
Accounts receivable/payable
Amounts to be received in the future due to the sale of goods or services.Amounts to be paid in the future for goods or services already acquired
Proving cash
Determining that the amount of cash agrees with the accounting records.
Opening an account
Writing an account title and number on the heading of an account.
Petty cash
An amount of cash kept on hand and used for making small payments
Business plan
A formal written document that describes the nature of a business and how it will operate.
Chart of accounts
A list of accounts used by a business.
Sales invoice
An invoice used as a source document for recording a sale on account. A sales invoice is also referred to as a sales ticket or a sales slip.
Correcting entry
If a transaction has been improperly journalized and posted to the ledger, the incorrect journal entry should be corrected with an additional journal entry, called a correcting entry.
A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents.