Debits and Credits (Flashcards)

Under the accrual method, the accounts for these are debited 1) when they are used up in the process of earning revenues, or 2) in the period when they expire.

Under the accrual method, these accounts are credited when they are earned through the delivery of goods or services.

This type of account is credited when a plant asset is sold for more than its book value.

This type of account is debited when a plant asset is sold for less than its book value.

This general ledger record is used for recording resources that have future economic value including prepaid expenses.

This type of general ledger account is used for recording obligations including deferred revenues and accrued expenses.

This list of the general ledger accounts does not include the account balances.

This account is debited when the owner withdraws business cash (or other assets) for personal use. At the end of the accounting year, the balance is transferred (closed) directly to the owner’s capital account.

This includes both a debit amount and a credit amount that will be posted to the general ledger accounts.

This type of journal entry is used to accrue or defer amounts prior to preparing a company’s financial statements.

These entries transfer the end-of-the-year balances from the income statement accounts to a balance sheet equity account. These will result in the income statement accounts beginning each accounting year with a zero balance.

In manual accounting systems this is defined as the book of original entry.

This type of entry has only one account that is debited and only one account that is credited.

This type of entry has more than one account that is debited and/or more than one account that is credited. An example is a debit to Cash for $530, a credit to Sales for $500, and a credit to Sales Taxes Payable for $30.

This journal requires that both the account being debited and the account being credited be shown with their respective amounts.

Examples of this type of journal include the sales journal, cash receipts journal, cash payments journal, and purchases journal. It requires writing less information than needed in a general journal.

In a manual system this is the recording of amounts from a journal into the general ledger (and perhaps a subsidiary ledger).

This 500-year-old accounting system requires that every business transaction will involve two or more accounts and that the debit amounts will have the same total as the credit amounts.

This type of asset account is expected to have a credit balance. Examples are Allowance for Doubtful Accounts and Accumulated Depreciation.

This type of liability account is expected to have a debit balance. An example is Discount on Bonds Payable.

This type of revenue account is expected to have a debit balance. Examples include Sales Returns and Allowances and Sales Discounts.

This internal report lists the balances in each of the general ledger accounts in either a debit or credit column for the purpose of showing that the general ledger has debits equal to credits.

This general ledger account’s credit balance reports a retailer’s main operating revenues for the accounting year.

Two of these records are involved in every business transaction.

This accounting method reports revenues when they are earned and expenses when they occur.

This mathematical expression is assets = liabilities + stockholders’ (or owner’s) equity. It should always be in balance when the double-entry system is used.

The balance in this type of account will be carried forward from the end of an accounting year to the beginning of the next accounting year.

The balance in this type of account will be closed at the end of the accounting year so that the account will begin the following year with a zero balance.