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Ch. 2 Accounting

Ledger
A book of the ACCOUNTS used to record increases and decreases in the accounting system. A group of accounts for a business entity
Charts of accounts
A list of accounts in the ledger, the accounts are normally listed in the order in which they appear on the financial statement
Journalizing
the process of recording a transaction in the journal
Intangible assets include patent rights copyright and trademark, they also include accounts receivable prepaid such as insurance buildings equipment Land and cash
What are some examples of an Asset?
posting
the process of transferring the debits and credits from the journal entries to the account
are often identified on the balance sheet by titles “Payable” and “Unearned”
How to identify liabilities?
Fees earned, fares earned, commission revunes, and rent revuene
What are some examples of revenues?
Examples of expenses including wages expense, rain expense, utilities expense, supplies expense, and miscellaneous expense
What are some examples of expenses?
1. Assets
Cash, accounts recievable, supplies, prepaid insurance, land, office equipment
2. Liabilites
Accounts payable
Unearned rent
3. Stockholders equity
Common stock
Retained earnings
Dividends
What is included on the balance sheet accounts?
after the journal entries are posted.
When are Unadjusted Trial balance prepared?
4. Revenue
Fees earned
5. Expenses
Wages expense
Supplies expense
Rent expense
Utilities expense
Miscellaneous expense
What is included on the income statement accounts?
largest to smallest with miscellaneous last
How do you list expenses?
Double entry accounting system
The system is based on the account equation that requires: every business transaction to be recorded in at least two accounts, the total Deb it’s recorded for each transaction to be equal to the total credit record
Journal
Using the rules of the debit and credit transactions are initially into the record called what
(a book where the transactions are listed the events in chronological order)
DEBIT
what is the left side of the t-account called?
CREDIT
what is the right side of the t-account called?
Increase in debit, decreases in credit
The normal balance of an asset account is?
increase in credit, decrease in debit
The normal balance of a liabilities account is?
The normal balance of the stockholders’ equity account?
is the same as the liabilities account because its on the same side of the equation
increase in credit, decrease in debit
adds to stockholders’ equity, therefore the balance is increase in credit, decrease in debit
The normal balance of revenues?
subtract from stockholders’ equity, therefore the balance is the same as an asset account, increase in debit, decrease in credit
The normal balance of Expenses?
The normal balance of dividends?
subtracts from stockholders’ equity, therefore the balance is the same as an asset account, increase in debit, decrease in credit
1. Transaction
2. Journal entry is prepared
3. Transfer information from the journal to the ledger (accounts) – then you post it (T-Accounts).
4. Unadjusted Trial balance
What are the steps to take in the accounting cycle?
Transaction
document is prepared as evidence of the what?
trial balance
errors occur in posting debits and credits from the journal to the ledger. One way to detect such as errors is by preparing
Unadjusted Trial balance
list every account (with bal) separating the balance into a debit and credit column total the 2 columns to prove they are equal (checking for errors)
~The excess of the credits of a liability account over the debits is the balance of the account.
~The excess of the credits of a stockholders’ equity account over the debits is the balance of the account.
what are true about T-accounts?
a debit to Accounts Payable
What is the journal entry to pay creditors on account would include?
in the order in which they occur in the journal.
How are debits and credits for each journal entry are posted to the accounts?

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