Basic Ideas
A list of all accounts and their balances
at a particular date, showing that total debits equal total credits.
What is a trial balance?
Associated with "left" side of an account
What is debit?
You would _____ it to increase an expense account
What is Debit?
Associated with the "right" side of an account
What is credit?
Increases liabilities and stockholders equity
What is credit?
The format used for recording business transactions
What is journal entry?
We want to create a journal entry after purchasing equipment using cash. What would this entry look like?
Equipment (asset) Debit
Cash (asset) Credit
When we debit an asset, this indicates an increases, and when we credit an asset, we are indicating a decrease.
A "hint" word to remember the different kinds of accounts and whether they have a credit or debit normal balance
A collection of each account with its individual transactions and resulting account balance.
What is general ledger?
Our company just received a bank loan of $35,000 to purchase equipment, supplies, and pay salaries for our company. What journal entry would we record?
Cash $35,000
Notes Payable $35,000
(obtain bank loan)
Notice that credits and debits equal, a descriptor is given for the notes payable.
Key word that indicates something is a liability.
Key word that indicates something is an asset.
Payable
Receivable
The trial balance is for
What is internal parties? The trial balance is only used for internal parties for planning and review, not published to anyone.