ACG 2021 Chapter Notes - Chapter 2: Accounts Payable, Deferral, Accounting Equation
Document Summary
Accounting systems are designed to show the increases and decreases in each accounting equation element as a separate record. Account- separate records that show the increases and decreases in accounting equation elements. T account- resembles the letter t; the left side is called the debit side and the right side is called the credit side. Increases in assets are recorded on the debit (left side) of an account. Decreases in assets are recorded on the credit (right side) of an account. Balance of the account- the excess of the debits of an asset account over its credits. In an actual accounting system, a more formal account form replaces the t account. Ledger- a group of accounts for a business entity. Chart of accounts- list of the accounts in the ledger. The accounts are listed in the order in which they appear in the financial statements. Balance sheet accounts are listed first in the order of assets, liabilities, and owner"s equity.