| A | B |
|---|
| assets | items of value owned or controlled by a business |
| liabilities | creditors' claims to the assets of a business |
| stockholders' equity | owners' (stockholders')claims to the assets of a corporation |
| accounting equation | assets=liabilities +owners'/ stockholders' equity |
| account | a record of increases and decreases in and the balance for a specific item such as supplies |
| double-entry accounting | an accounting system in which every business transaction affects the balance in at least two accounts |
| debit | an amount entered on the left side of an account |
| credit | an amount entered on the right side of an account |
| fiscal year | the time covered by an accounting by an accounting report |
| revenue | the income earned from the sale of goods and services |
| cost of merchandise | the actual cost to the business of the merchandise to be resold to customers |
| expenses | amounts paid for goods and services used to operate a business |
| genreal ledger | all of a business's account |
| accounting cycle | the activities a business completes within a fiscal period to keep its accounting records in order |
| source document | a paper prepared as evidence that a business transaction took place |
| journal | a chronological record of a business's transactions |
| general journal | a two-column journal in which all types of transactions can be recorded |
| contra account | an account whose balance decreases another account's balance |
| correcting entry | an entry made to corect an error discovered after it has been posted to the ledger |
| sales journal | a special journal used to record only the sale of merchandise on account |
| cash receipts journal | a special journal used to record all transaction in which cash is received |
| posting | the process of transferring amounts from a journal to ledger accounts |
| subsidiary ledger | a ledger or book that is summarized in a controlling account in the general ledger |
| controlling account | an account whose balance must equal the total of all of the account balances in a subsidiary ledger |
| trial balance | a report prepared to prove the equality of debits and credits in the general ledger |
