Terms Introduced in the Chapter

The business documents — invoices, bills, cash memos, pay-in-slips, cheques and vouchers — that provide the written evidence of a transaction and form the basis on which it is r …

The statement of equality between a firm's resources and the claims against them: Assets = Liabilities + Capital. It always stays balanced because every tr …

The books in which a transaction is recorded for the first time, in chronological order, from the source document — the journal (and its sub-divisions). The process of recordi …

Journalising is recording a transaction in the journal (the book of original entry); posting is the subsequent transfer of each debit and credit from the journal to the ind …

The system of recording in which every transaction affects at least two accounts with equal debit and credit amounts, so the accounting equation …

The right-hand side of an account (abbreviated Cr.). Crediting an account means entering an amount on its right side — an increase for liabilities, capital and revenues, and a d …

The left-hand side of an account (abbreviated Dr.). Debiting an account means entering an amount on its left side — an increase for assets and expenses, and a decrease for lia …

A record, in the form of a two-sided T, that summarises all the increases and decreases relating to a particular item (such as cash, a customer or an expense), so its net pos …

The principal book of accounts, containing all the accounts to which entries are transferred (posted) from the books of original entry, organised account by …

The basic book of original entry in which transactions are first recorded in chronological order, each with its debit, credit and a narration, before …