Here you can find essential accounting definitions for topics around account, journal entry and ledger.

You are watching: When three or more accounts are required in one journal entry, the entry is referred to as a

Account – A record of increases and decreases in specific asset, liability, or owner’s equity items.Permanent (real) accounts – Accounts that relate to one or more accounting periods. Consist of all balance sheet accounts. Balances are carried forward to next accounting period.Temporary (nominal) accounts – Accounts that relate only to a given accounting period. Consist of all income statement accounts and owner’s drawing account. All temporary accounts are closed at end of the accounting period.Control account – An account in the general ledger that summarizes subsidiary ledger.Journal – An accounting record in which transactions are initially recorded in chronological order.Cash payments (disbursements) journal – A special journal that records all cash paid.Cash receipts journal – A special journal that records all cash received.Journalizing – The entering of transaction data in the journal.Purchases journal – A special journal that records all purchases of merchandise on account.Sales journal – A special journal that records all sales of merchandise on account.Special journal – A journal that records similar types of transactions, such as all credit sales.Ledger – The entire group of accounts maintained by a company.Subsidiary ledger – A group of accounts with a common characteristic.Chart of accounts – A list of accounts and the account numbers that identify their location in the ledger.Double-entry system – A system that records in appropriate accounts the dual effect of each transaction.Credit – The right side of an account.Debit – The left side of an account.Compound entry – A journal entry that involves three or more accounts.General journal – The most basic form of journal.General ledger – A ledger that contains all asset, liability, and owner’s equity accounts.Normal balance – An account balance on the side where an increase in the account is recorded.Posting – The procedure of transferring journal entries to the ledger accounts.Simple entry – A journal entry that involves only two accounts.T-account – The basic form of an account.Three-column form of account – A form with columns for debit, credit, and balance amounts in an account.Trial balance – A list of accounts and their balances at a given time.Closing entries – Entries made at the end of an accounting period to transfer the balances of temporary accounts to a permanent owner’s equity account, Owner’s Capital.Post-closing trial balance – A list of permanent accounts and their balances after a company has journalized and posted closing entries.Reversing entry – An entry, made at the beginning of the next accounting period, that is the exact opposite of the adjusting entry made in the previous period.Classified balance sheet – A balance sheet that contains standard classifications or sections.Correcting entries – Entries to correct errors made in recording transactions.Current assets – Assets that a company expects to convert to cash or use up within one year.Income Summary – A temporary account used in closing revenue and expense accounts.Liquidity – The ability of a company to pay obligations expected to be due within the next year.Long-term investments – Generally, (1) investments in stocks and bonds of other companies that companies normally hold for many years, and (2) long-term assets, such as land and buildings, not currently being used in operations.Operating cycle – The average time that it takes to go from cash to cash in producing revenues.Stockholders’ equity – The ownership claim of shareholders on total assets. It is to a corporation what owner’s equity is to a proprietorship.Worksheet – A multiple-column form that may be used in making adjusting entries and in preparing financial statements.
*

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Comment

Name *

Email *

Website

Save my name, email, and website in this browser for the next time I comment.

See more: What Elements Are Found In Water, Water For Life: 3 What Are Compounds


Are you looking for easy accounting tutorial? Established since 2007, mslsec.com hosts more than 1300 articles (still growing), and has helped millions accounting student, teacher, junior accountants and small business owners, worldwide.