ch02 - CHAPTER 2 The Recording Process STUDY OBJECTIVES 1...

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CHAPTER 2 The Recording Process STUDY OBJECTIVES 1. EXPLAIN WHAT AN ACCOUNT IS AND HOW IT HELPS IN THE RECORDING PROCESS. 2. DEFINE DEBITS AND CREDITS AND EXPLAIN HOW THEY ARE USED TO RECORD BUSINESS TRANSACTIONS. 3. IDENTIFY THE BASIC STEPS IN THE RECORDING PROCESS. 4. EXPLAIN WHAT A JOURNAL IS AND HOW IT HELPS IN THE RECORDING PROCESS. 5. EXPLAIN WHAT A LEDGER IS AND HOW IT HELPS IN THE RECORDING PROCESS. 6. EXPLAIN WHAT POSTING IS AND HOW IT HELPS IN THE RECORDING PROCESS. 7. PREPARE A TRIAL BALANCE AND EXPLAIN ITS PURPOSES. 2-1
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CHAPTER REVIEW The Account 1. (S.O. 1) An account is an individual accounting record of increases and decreases in a spe- cific asset, liability, or owner's equity item. 2. In its simplest form, an account consists of (a) the title of the account, (b) a left or debit side, and (c) a right or credit side. The alignment of these parts resembles the letter T, and there- fore the account form is called a T-account. Debits and Credits 3. (S.O. 2) The terms debit and credit mean left and right, respectively. a. The act of entering an amount on the left side of an account is called debiting the ac- count and making an entry on the right side is crediting the account. b. When the debit amounts exceed the credits, an account has a debit balance; when the reverse is true, the account has a credit balance.
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