intac chapter 1

• Journals are used only under the double-entry system
• Debit

  The left side of an account
• Credit


  The right side of an account
• Ledger


  A systematic compilation of a group of accounts
• Cash basis and accrual basis of accounting can be used under both the double and single-entry systems
• The accounting cycle represents the steps or procedures used in recording transactions and preparing financial statements
• Journal is a formal record where transactions are initially recorded
• Trial balance


  A list of accounts and their balances used to check the equality of total debits and credits
• Reversing entries may be made on accruals, prepayments initially recorded using the expense method, and unearned income initially recorded using the income method
• Subsidiary ledgers are used under both double and single-entry systems
• Income is initially recorded using either the liability method or income method. Expenses are initially recorded using either the asset method or expense method. Regardless of the method used, assets, liabilities, equity, income, and expenses presented in the financial statements are the same
• Adjusting entries

  Involve at least one statement of financial position account and one statement of comprehensive income account. Used to update the balances of accounts prior to the preparation of financial statements
• Financial statements are the means by which the information accumulated and processed in financial accounting is periodically communicated to the users
• Chart of accounts

  A list of all the accounts used by the entity
• Account


  The basic storage of information in accounting
• Journal entries

  Initially recorded in the journal and then posted to the ledger
• Errors revealed by a trial balance are those that have caused the total debits and total credits to be unequal