The difference between the increases (including the beginning balance) and decreases recorded in an account.
Account balance
An entry that decreases asset and expense accounts or increases liability, owner's equity, and revenue accounts; recorded on the right side of a T-accounts.
Credit
An entry that increases asset and expense accounts or decreases liability, owner's equity, and revenue accounts; recorded on the left side of a T-account.
Debit
Exchanges between the entity and some outside person or organization.
External transactions
The most flexible type of journal; can be used to record any kind of transaction.
General Journal
Exchanges within an organization that can also effect the accounting equation.
Internal transactions
The process of recording transactions in a journal.
Journalizing
An unconditional written promise to pay a definite sum of money on demand or on a defined future date(s); also called promissory note.
Note Receivable
The process of transferring journal entry information to the ledger.
Posting
An unconditional written promise to pay a definite sum of money on demand or on a defined future date(s); also called note receivable.
Promissory Note
Another name for business papers; these documents are the source of information recorded with accounting entries and can be in either paper or electronic form.
Source documents
Liabilities created when customers pay in advance for products or services; created when cash is received before revenues are earned; satisfied by delivering the products or services in the future.
Unearned revenues
Account:
A place or location within an accounting system in which the increases and decreases in a specific asset, liability, or equity are recorded and stored.
Account balance:
The difference between the increases (including the beginning balance) and decreases recorded in an account.
Accounting cycle:
The steps repeated each reporting period for the purpose of preparing financial statements for users.
Balance column ledger account:
An account with debit and credit columns for recording entries and a third column for showing the balance of the account after each entry is posted.
Chart of accounts:
A list of all accounts used by a company; includes the identification number assigned to each account.
Compound journal entry:
A journal entry that affects at least three accounts.
Credit:
An entry that decreases asset, expenses, and owner's withdrawals accounts or increases liability, owner's capital, and revenue accounts; recorded on the right side of a T-account.
Debit:
An entry that increases asset, expense, and owner's withdrawals accounts or decreases liability, owner's capital, and revenue accounts; recorded on the left side of a T-account.
Double-entry accounting:
An accounting system where every transaction affects and is recorded in at least two accounts; the sum of the debits for all entries must equal the sum of the credits for all entries.
External transactions:
Exchanges between the entity and some other person or organization.
General Journal:
The most flexible type of journal; can be used to record any kind of transaction.
Internal transactions:
Exchanges within an organization that can also affect the accounting equation.
Journal:
A record where transactions are recorded before they are recorded in accounts; amounts are posted from the journal to the ledger; also called the book of original entry.
Journalizing:
The process of recording transactions in a journal.
Ledger:
A record containing all accounts used by a business.
Normal balance:
The debit or credit side on which an account increases. For example, assets increase with debits therefore the normal balance for an asset is a debit. Revenues increase with credits therefore a credit is the normal balance for a revenue account.
Note Receivable:
An unconditional written promise to pay a definite sum of money on demand or on a defined future date(s); also called promissory note.
Posting:
The process of transferring journal entry information to ledger accounts.
Posting Reference (PR) column:
A column in journals where individual account numbers are entered when entries are posted to the ledger. A column in ledgers where journal page numbers are entered when entries are posted.
Prepaid expenses:
An asset account containing payments made for assets that are not used until later.
Promissory Note:
An unconditional written promise to pay a definite sum of money on demand or on a defined future date(s); also called note receivable.
Source documents:
These documents are the source of information recorded with accounting entries and can be in either paper or electronic form.
T-account:
A simple characterization of an account form used as a helpful tool in showing the effects of transactions and events on specific accounts.
Trial balance:
A list of accounts and their balances at a point in time; the total debit balances should equal the total credit balances.
Unearned revenues:
Liabilities created when customers pay in advance for products or services; created when cash is received before revenues are earned; satisfied by delivering the products or services in the future.
