Page 100 - Accounting Principles (A Business Perspective)

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Trial Balance
2010 July 31
Acct.
No. Account Title Debits Credits
100 Cash $ 9,700
103 Accounts Receivable 8,100
130 Land 40,000
140 Buildings 24,000
200 Accounts Payable $ 1,100
201 Notes Payable 40,000
300 Capital Stock 35,000
310 Retained Earnings 2,100
320 Dividends 1,000
402 Horse Boarding Fee Revenue 4,500
404 Riding and Lesson Fee Revenue 3,600
507 Salaries Expense 1,400
513 Feed Expense 1,100
540 Interest Expense 200
568 Miscellaneous Expense 800
$86,300 $86,300
Key terms
Account A part of the accounting system used to classify and summarize the increases, decreases, and
balances of each asset, liability, stockholders' equity item, dividend, revenue, and expense. The three-column
account is normally used. It contains columns for debit, credit, and balance.
Accounting cycle A series of steps performed during the accounting period (some throughout the period
and some at the end) to analyze, record, classify, summarize, and report useful financial information for the
purpose of preparing financial statements.
Accrual basis of accounting Recognizes revenues when sales are made or services are performed,
regardless of when cash is received. Recognizes expenses as incurred, whether or not cash has been paid out.
Business transactions Measurable events that affect the financial condition of a business.
Chart of accounts The complete listing of the account titles and account numbers of all of the accounts in
the ledger; somewhat comparable to a table of contents.
Compound journal entry A journal entry with more than one debit and/or credit.
Credit The right side of any account; when used as a verb, to enter a dollar amount on the right side of an
account; credits increase liability, stockholders' equity, and revenue accounts and decrease asset, expense,
and Dividends accounts.
Credit balance The balance in an account when the sum of the credits to the account exceeds the sum of
the debits to that account.
Cross-indexing The placing of (1) the account number of the ledger account in the general journal and (2)
the general journal page number in the ledger account.
Debit The left side of any account; when used as a verb, to enter a dollar amount on the left side of an
account; debits increase asset, expense, and Dividends accounts and decrease liability, stockholders' equity,
and revenue accounts.
Debit balance The balance in an account when the sum of the debits to the account exceeds the sum of the
credits to that account.
Double-entry procedure The accounting requirement that each transaction must be recorded by an entry
that has equal debits and credits.
Horizontal analysis The calculation of dollar and/or percentage changes in an item on the financial
statements from one year to the next.
Journal A chronological (arranged in order of time) record of business transactions; the simplest form of
journal is the two-column general journal.

Accounting Principles: A Business Perspective 101 A Global Text