Accounting 1 Dersi 2. Ünite Sorularla Öğrenelim

What is an account?

An account is an individual accounting tool that shows the increases and decreases in a specific asset, liability, or owner’s equity item during a specified period.

What are the typical asset accounts?

• Cash 
• Accounts Receivable
• Notes Receivable
• Prepaid Expenses
• Land
• Buildings
• Equipment, Furniture, and Fixtures

What are the typical liability accounts?

• Accounts payable
• Notes payable
• Unearned tevenue 
• Accrued liabilities

What are the typical owner's equity accounts?

• Owner,Capital
• Owner, withrawals
• Revenues
• Expenses

What does Owner’s Capital account represent?

Owner’s Capital account represents the net contribution of the owner in the business.

What is ledger?

The ledger is a record of all the accounts that the company uses the changes in those accounts, and their balances. A ledger is often defined as a book of accounts.

Why is the basic form of account called as T-account?

The basic form of account generally is called as T-account, because the shape of the account resembles the letter T.

What do we mean by debit side and credit side in T-account?

T-accounts have a title and include two sides: Debit (left) and credit (right). Debit represents the left side of an account. Credit represents the right side of an account.

What does debit balance refer to?

Debiting refers to the act of making an entry on the left side of an account and when debit amount exceeds credits, debit balance occurs.

What does credit balance refer to?

Crediting refers to the act of making an entry on the right side of an account and when credit amount exceeds debits, credit balance occurs.

What do we mean by double-entry system?

Each transaction must affect two or more accounts to keep the basic accounting equation in balance. In other words, for each transaction, one or more accounts must be debited, or entered on the left side of the account, and one or more accounts must be credited, or entered on the right side of the account, and the total monetary amount of the debits must equal the total dollar amount of the credits. The equality of debits and credits provides the basis for the double-entry system of recording transactions. Under double-entry system, debit and credit procedure is used to keep the accounting equation in balance by using appropriate accounts instead of using plus and minus procedure.

What are the three main steps which occur repeatedly in the recording process?

There are three main steps which occur repeatedly in the recording process:
1. Analyze each transaction for its effects on the accounts.
2. Enter the transaction information in a journal.
3. Transfer the journal information to the appropriate accounts in the ledger.

What does the journal refer to in the recording process?

The journal is the main book which includes the original entries of company’s transactions. Transactions are recorded in chronological order (following the order in which they occurred) by applying debit and credit procedure.

What is journalizing?

Entering transaction data in the journal is known as journalizing.

What do we mean by posting to ledger?

Journal information for each transaction is simultaneously transferred to individual T-accounts in order to calculate the balances of each account used in the journal entry. This act is called posting and the ledger refers to the entire group of individual T-accounts. In short, posting refers the to transfer of the journal information to the appropriate individual T-accounts in the ledger.

What does posting to refer to?

Posting is the procedure of transferring journal entries to the ledger accounts.

What is entered first in a journal entry?

In a journal entry, Debits are ALWAYS entered first, and Credits are INDENTED and listed second.

What is a trial balance?

A trial balance is a list of accounts and their balances at a given time. The trial balance proves the mathematical equality of debits and credits after posting.

What is the primary purpose of a trial balance?

The primary purpose of a trial balance is to prove (check) that the debits equal the credits after posting.

In what way does the trail balance differ from the sheet balance?

A trial balance is an internal document used only by company insiders. Outsiders see only the company’s financial statements, not the trial balance.

How and when a trial balance is prepared?

Although a trial balance may be prepared at any time, it is usually prepared on the last day of the accounting period. We should first list the account titles in order to prepare a trial balance. After that appropriate balance amounts are entered into debit or credit column. Then sum of debits and sum of credits are calculated. And at the final step, the equality of the sum of debits and the sum of credits is proved.