Chapter2Outline

Chapter2Outline - CHAPTER REVIEW The Account 1. (S.O. 1) An...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER REVIEW The Account 1. (S.O. 1) An account is an individual accounting record of increases and decreases in a specific asset, liability, or stockholders’ 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 therefore 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 account 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. 4. In a double-entry system, equal debits and credits are made in the accounts for each transaction. Thus, the total debits will always equal the total credits. 5. The effects of debits and credits on assets and liabilities and the normal balances are: Accounts Debits Credits Normal Balance Assets Increase Decrease Debit Liabilities Decrease Increase Credit 6. Accounts are kept for each of the five subdivisions of stockholders' equity:
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

Chapter2Outline - CHAPTER REVIEW The Account 1. (S.O. 1) An...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online