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accounts
used to record and retain the monetary information from transacations
General ledger:
record of all the accounts of a business
T-account
An account format with a debit (left) side and a credit (right) side.
Debit and Credit Rules for accounts
+asset Accounts- increased by debits and decreased by credits +liability Accounts- increased by credits and decreased by debits +owner's Equity (capital accounts)- increased by credit and decreased by debit 1) withdrawal accounts increased by debit and decreased by credit …
Double entry rule
States that in the recording of a transaction, the total amount of the debit entries must equal the total amount of the credit entries for the transaction
Account Balance
Difference between total debits and total credits (including the beginning balance) for an account.
accounting cycle
the series of accounting activities included in recording financial information for a fiscal period
general journal
include: (1) the date of the transaction (2) the accounts to be debited and credited (3) the amounts of the debit and credit entries and (4) an explanation of each transaction
Posting
The process of transferring journal entry information from the journal to the ledger
chart of accounts
a list of all the accounts of a business and the numbers assigned to those accounts
Trial Balance
A list of each account and it's balance, used to prove equality of debits and credits.
Prepaid item
An economic resource for which a company has paid cash and that the company expects to use in its operating activities in the near future. (ex supplies, prepaid rent, prepaid insurance)
unearned revenue
an obligation of a company to provide goods or services in the future, results from an advanced receipt of cash
Accrued Revenue
Revenues that have been earned but not recorded in the accounts.
adjusted trial balance
schedule prepared to prove the quality of the equality of the debit and credit balances in a company's general ledger accounts after it has made the adjustment entries
transposition
occurs when two digits in a number are mistakenly reversed
slide
occurs when the digits are listed in the correct order but are mistakenly moved one decimal place right or left
closing entries
Entries recorded at the end of each accounting period to transfer end-of-period balances in revenue, gain, expense, loss, and withdrawal (dividend for a corporation) accounts to the capital account (to retained earnings for a corporation)
income summary
temporary account a company uses in the closing process to accumulate the amount of the company's net income (or net loss) before it transfers this amount to the owner's capital account
Post-Closing Trial Balance
Should be prepared as the last step of the accounting cycle to check that debits equal credits and all temporary accounts have been closed.
Stockholders' Equity
(Common Stock, Retained Earnings.) Dividends decrease retained earnings (and, therefore, Stockholders' equity).

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