After each transaction, the accounting equation must remain in balance.

A negative amount for net worth would reflect more debt than assets, something a creditor would favor.

When two asset accounts are changed in a transaction, there must be an increase and a decrease.

Detailed information about changes in owner’s equity is needed by owners and managers to make sound business decisions.

When items are bought and paid for at a future date, another way to state this is to say these items are bought on account.

A transaction for the sale of goods or services results in a decrease in owner’s equity.

Keeping separate the financial records for a business and for its owner’s personal belongings is an application of the Business Entity accounting concept.

An expense is a decrease in owner’s equity resulting from the operation of a business.

Business ethics are the principles of right and wrong that guide an individual in making decisions.

Payments for advertising, equipment repairs, utilities, and rent are liabilities.

Withdrawals are assets taken out of a business for the owner’s personal use.

The most common type of withdrawal by an owner from a business is the withdrawal of cash.

When an owner withdraws cash from the business, the transaction affects both assets and owner’s equity.

A withdrawal is an expense.

A formal report that shows what an individual owns, what an individual owes, and the difference between the two.

Planning, recording, analyzing, and interpreting financial information.

An equation showing the relationship among assets, liabilities, and owner's equity.

A business activity that changes assets, liabilities, or owner's equity.

The standards and rules that accountants follow while recording and reporting financial activities.

The amount remaining after the value of all liabilities is subtracted from the value of all assets.

The difference between PERSONAL assets and PERSONAL liabilities.

The difference between PERSONAL assets and PERSONAL liabilities.

A sale for which cash will be received at a later date.

Assets taken out of a business for the owner’s personal use.

A formal written document that describes the nature of a business and how it will operate.

A business owned by one person.

The use of ethics in making business decisions.

A business that performs an activity for a fee.

The difference between assets and liabilities.

An amount owed by a business.

A person or business to whom a liability is owed.

A decrease in owner’s equity resulting from the operation of a business.

An increase in owner’s equity resulting from sales.

Financial rights to the assets of a business.

An accounting device used to analyze transactions is a T account.

An amount recorded on the right side of a T account is a debit.

The balance of an account increases on the same side as the normal balance side.

Asset accounts DECREASE on the CREDIT side.

Each transaction changes the balances in at least two accounts.

A list of accounts used by a business is a chart of accounts.

When cash is paid for supplies, the supplies account is increased by a credit.

The left side of an asset account is the credit side because asset accounts are on the left side of the accounting equation.

Increases in expense accounts (which decreases owner's equity account) are recorded as debits.

The normal balance side of an Accounts Receivable account is a debit.

Accounts Payable accounts are increased on the credit side of a T account.

Cash is increased with a debit.

Prepaid Insurance is decreased with a credit.

It is typical to record a withdrawal in the owner's equity account.

The left side of a T account is the

If an amount is recorded on the side of a T account opposite the normal balance side, the account balance is

The normal balance of a liability account is recorded on the

When an owner invests cash in a business, the owner’s capital account is

When a business pays cash on account, a liability account is

When cash is received from sales, the change in the owner’s equity is usually recorded

Increases in a revenue account are shown on a T account's

When $1,500 cash is received on account,

The normal balance side of any revenue account (OE) is the

The source document used when nothing else is appropriate is a memorandum.

A receipt is the source document for cash received.

The accounting concept Unit of Measurement is being applied when a source document is prepared for each transaction.

A general journal page is complete when there is insufficient space to record any more entries.

To correct an error in a journal, one can simply erase the incorrect item and write the correct item.

A transaction recorded in a journal is not considered a permanent record.

Transactions are recorded in a journal in chronological order.

A complete journal entry consists of the date, the debit amount, the credit amount, and a source document.

When an entry in an amount column is an even dollar amount, “00” is entered in the cents column.

The Objective Evidence concept requires proof that a transaction did occur.

A calculator tape is the source document for daily cash sales.

Every business uses the same journal to record transactions.

In double-entry accounting, each transaction affects at least two accounts

Each journal entry requires at least two lines.

________________ is used as a source document for recording a sales on account.

A form of recording transactions in a chronological order.

a form on which a brief message is written to describe a transaction.

Recording transactions in a journal.

A form describing the goods or services sold, the quantity, the price, and the terms of sale.

a business form ordering a bank to pay cash from a bank account.

information for each transaction recorded in a journal

a business form for giving written acknowledgement for cash received.

a business paper from which information is obtained for a journal entry.

the recording of debit and credit parts.

All corrections for posting errors should be made in a way that leaves no question as to the correct amount.

A journal shows in one place all the changes in a single account.

The account number is placed in the Post. Ref. column of the journal as the last step in the posting procedure.

The posting reference should always be recorded in the journal’s Post. Ref. column before amounts are recorded in the ledger.

The two steps for opening an account are writing the account title and recording the balance.

The procedure of arranging accounts in a general ledger, assigning account numbers, and keeping records current is known as file maintenance.

The Cash account is the first asset account and is numbered 110.

The steps for posting are to write the date, the journal page number, the amount, and the balance.

If the payment of cash for rent was journalized and posted in error as a debit to Miscellaneous Expense instead of Rent Expense, the correcting entry will include a credit to Cash.

If the previous account balance and the current entry posted to an account are both debits, the new account balance is a debit.

A group of accounts is called a ledger.

The only use for the Post. Ref. column of a journal and general ledger is to indicate which entries in the journal still need to be posted if posting is interrupted.

When posting is complete, the Post. Ref. column in the General Journal is completely filled in with account numbers.

When adding a new expense account between accounts numbered 510 and 520, the new account is assigned the account number 515.

Errors discovered after an entry is posted may be corrected by ruling through the item.

The first digit in the account number 520 means that the account is in the

When accounts are arranged in a general ledger, account numbers are assigned, and the chart of accounts is kept up to date, the accounting personnel are

The procedure for transferring information from a journal entry to a ledger account is

The last step in the posting procedure is to write the

The second step in the posting procedure is to write the

An account number in the journal’s Post. Ref. column shows

Posting references in a journal are

If posting is interrupted, the accounting personnel know to resume posting

Determining that the amount of cash agrees with the accounting records is

If an error requires a correcting entry, the source document describing the correction to be made