An accounting event is a transaction or change, either internal or external, that is recognized by the accounting recording system. It involves recording entries as debits and credits.
Accounts prepared under the double-entry bookkeeping system, where the retained earnings figure on the profit and loss account matches the increase in net worth on the balance sheet, subject to changes like capital injections.
Also known as the accounting equation, the balance sheet equation is the foundational formula that forms the basis of double-entry bookkeeping: Assets = Liabilities + Equity. This equation ensures that a company's financial statements are balanced, indicating that all resources (assets) owned by the company are financed either by borrowing (liabilities) or by investing funds (owner’s equity).
A book or record where specific types of transactions are logged before being integrated into the double-entry bookkeeping system. Common examples include the day book, cash book, and journal.
A compound journal entry is an accounting entry that affects more than one account, allowing for multiple debits and/or credits in a single transaction. It is commonly used for complex transactions in double-entry bookkeeping.
A debit is an entry on the left-hand side of an account in double-entry bookkeeping that increases assets or recorded expenditures of an organization. In the context of a bank account, a debit indicates an outflow of funds.
Understanding the fundamental rules of debit and credit in double-entry bookkeeping is essential for accurate financial accounting.
An essential accounting term used in double-entry bookkeeping to record increases in assets or expenses and decreases in liabilities, revenues, or equity.
Double-entry accounting, also known as double-entry bookkeeping, is a system of financial records used in business whereby equal debits and credits are recorded for each transaction, ensuring the accounting equation (Assets = Liabilities + Owner's Equity) remains balanced.
A method of recording the transactions of a business in a set of accounts such that every transaction has a dual aspect and therefore needs to be recorded in at least two accounts.
Double-entry cost accounting involves maintaining cost accounting records using the principles of double-entry bookkeeping, which ensures that every financial transaction is recorded in at least two accounts, balancing debits and credits.
The Dual Aspect Principle is a fundamental concept in accounting that asserts every financial transaction has two aspects: one that results in a debit entry and another that results in a credit entry.
An entry is a record made in a book of account, register, or computer file of a financial transaction, event, proceeding, etc. Entries are fundamental in the accounting process, ensuring that all financial activities are accurately recorded and tracked.
A memorandum entry in accounting is a record in the ledger that does not form part of the double-entry bookkeeping system. These entries are used to provide additional details or supporting information without affecting the financial statements.
A trial balance is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns. This process helps ensure the accuracy of the company’s financial records and is a critical step in the accounting cycle.
