Exam 3: The Double-Entry Framework

An increase or decrease in any asset, liability, owner's equity, revenue, or expense is always accompanied by an offsetting change within the basic accounting elements.

An investment of cash in a business by the owner

Match the terms with the definitions. -A list of accounts, showing the title and balance of each account, used to prove that the debit balances equal the credit balances.

The normal balance of a capital account

A trial balance is a list of all accounts showing the title and balance of each account.

The accounting equation must remain in balance.

Footings in T accounts

A purchase of an asset on account

The sum of the debits must equal the sum of the credits on the trial balance.

Match the terms with the definitions. -A tool used to illustrate the double-entry accounting system showing the account title, left side, and right side.

An account is a form or record used to keep track of the increases or decreases in the individual assets, liabilities, owner's equity, revenues, and expenses of a business entity.

Mandy withdraws $600 from her business. This transaction increases cash but decreases owner's equity.

If services for the month total $3,300 in cash and $700 on account, the cash account increases $700.

Withdrawals of cash and other assets by the owner for personal reasons decrease owner's equity.

Liability, owner's capital, and revenue accounts normally have

Liability accounts normally have debit balances.

Totals on the debit and credit sides to determine the balance of an account are known as

The owner's capital account normally has a credit balance.

Examples of revenue accounts include all of the following EXCEPT

The capital account