Accounting 101

Account - A record that summarizes all the transactions pertaining to a single item in the accounting equation. Account balance - The difference between the increases and decreases in an account. Account number - The number assigned to an account. Account title - The name given to an account. Accounting - The process of planning, recording, analyzing, and interpreting financial information. Accounting clerk - An accounting worker who processes routine details about accounting transactions. Accounting equation - An equation showing the relationship among assets, liabilities, and owner's equity. Accounting period - See fiscal period. Accounting system - A planned process designed to compile financial data and summarize the results in accounting records and reports. Accounts payable - Amounts to be paid in the future for goods or services already acquired. Accounts receivable - Amounts to be received in the future due to the sale of goods or services. Accrual basis of accounting - Reporting income when earned and expenses when incurred. Adjusted trial balance - A trial balance prepared after adjusting entries are posted. Adjusting entries - Journal entries recorded to update general ledger accounts at the end of a fiscal period