Bookkeeping Cycle Flashcards

An account entry on the left side is referred to as.

Answer: Debit

In the double-entry bookkeeping system, accounts are typically represented using a T-account format. The left side of any T-account is conventionally designated for recording debits. This fundamental rule applies universally across all account types, increasing assets and expenses while decreasing liabilities, equity, and revenue.

The goal of posting to a ledger is to apply deposits and charges to the correct account.

Answer: True

Posting is the crucial step in the accounting cycle where individual journal entries are transferred to their respective ledger accounts. The primary goal is to systematically categorize and accumulate all financial transactions, such as deposits and charges, into the correct accounts. This process ensures that each account reflects its accurate balance, which is essential for preparing reliable financial statements.

The task of recording, classifying, and summarizing financial transactions and events is known as accounting.

Answer: Bookkeeping

Bookkeeping is the foundational process within accounting that involves the systematic recording, classifying, and summarizing of financial transactions and events. It is the mechanical aspect of accounting, ensuring that all financial data is accurately captured. Accounting, in its broader sense, encompasses bookkeeping but also includes the interpretation, analysis, and reporting of this financial information.

An account entry on the right side is referred to as.

Answer: Credit

In the double-entry bookkeeping system, the right side of any T-account is always designated for recording credits. This is a fundamental convention that helps maintain the accounting equation. Credits increase liability, equity, and revenue accounts, while they decrease asset and expense accounts.

After a business transaction, journal entries are made in the

Answer: General Journal

After a business transaction occurs, the very first place it is recorded is in the General Journal. This is known as the book of original entry, where transactions are documented chronologically. Each journal entry details the accounts affected, the debit and credit amounts, and a brief explanation, before being transferred to the ledger.

A ledger is a collection of financial records.

Answer: True

A ledger is indeed a comprehensive collection of all the individual financial accounts used by a business. It serves as a repository where all transactions affecting a specific asset, liability, equity, revenue, or expense account are summarized. This organized collection allows for the calculation of account balances and the preparation of financial statements.

After you've recorded your diary entries, you can upload them to:

Answer: Ledger Accounts

After transactions are initially recorded in the general journal (sometimes referred to as a diary), they are then transferred, or 'posted,' to the individual ledger accounts. This process organizes all debits and credits by specific account, allowing for the calculation of each account's balance. The ledger accounts provide a detailed summary necessary for preparing financial statements.

After modifying journal entries have been recorded, this trial balance is established.

Answer: Adjusted Trial Balance

The Adjusted Trial Balance is prepared after all adjusting journal entries have been recorded and posted to the ledger accounts. These adjustments are crucial for ensuring that revenues and expenses are recognized in the correct accounting period and that asset and liability accounts reflect their true balances. This trial balance is then used to prepare the final financial statements.

Before year-end adjusting journal entries, which trial balance contains all of the business accounts?

Answer: Unadjusted Trial Balance

The Unadjusted Trial Balance is the first trial balance prepared in the accounting cycle, listing all general ledger accounts and their balances directly after transactions have been posted from the journal. It is created *before* any year-end adjusting entries are made. Its primary purpose is to verify that the total debits equal the total credits, ensuring the mathematical accuracy of the ledger before adjustments.