CHAPTER #4 THE BOOKKEEPING
PROCESS EXAM QUESTIONS WITH
CORRECT ANSWERS
accounting balance - ANSWER-The arithmetic sum of the additions and subtractions to
an access through a given date.
accrual - ANSWER-The process of recognizing revenue that has been earned but not
collected, or an expense that has been incurred but not paid.
accrued - ANSWER-Describes revenue that has been earned and a related asset that
will be collected, or an expense that has been incurred and a related liability that will be
paid.
adjustment - ANSWER-An entry usually made during the process of "closing the books"
that results in more accurate financial statements. Adjustments involve accruals and
reclassification. Adjustments are sometimes made at the end of interim periods, such as
month-end or quarter-end, as well.
charge - ANSWER-In bookkeeping, a synonym for debit.
chart of accounts - ANSWER-An index of accounts contained in a ledger.
closing the books - ANSWER-The process of posting transactions, adjustments, and
closing entries to the ledger and preparing the financial statements.
credit - ANSWER-The RIGHT side of an account. A decrease in asset and expense
accounts; an increase in liability, owners' equity, and revenue accounts.
debit - ANSWER-The LEFT side of an account. An increase in asset and expense
accounts; a decreases liability, owners' equity, and revenue accounts.
entry - ANSWER-A journal entry or a posting to an account
horizontal model - ANSWER-a representation of the balance sheet and income
statement relationship that is useful for understanding the effects of transactions and
adjustments on the financial statements.
journal - ANSWER-A chronological record of transaction.
journal entry - ANSWER-A description of a transaction in a format that shows the debit
account(s) and amount(s) and credit account(s) and amount(s).
PROCESS EXAM QUESTIONS WITH
CORRECT ANSWERS
accounting balance - ANSWER-The arithmetic sum of the additions and subtractions to
an access through a given date.
accrual - ANSWER-The process of recognizing revenue that has been earned but not
collected, or an expense that has been incurred but not paid.
accrued - ANSWER-Describes revenue that has been earned and a related asset that
will be collected, or an expense that has been incurred and a related liability that will be
paid.
adjustment - ANSWER-An entry usually made during the process of "closing the books"
that results in more accurate financial statements. Adjustments involve accruals and
reclassification. Adjustments are sometimes made at the end of interim periods, such as
month-end or quarter-end, as well.
charge - ANSWER-In bookkeeping, a synonym for debit.
chart of accounts - ANSWER-An index of accounts contained in a ledger.
closing the books - ANSWER-The process of posting transactions, adjustments, and
closing entries to the ledger and preparing the financial statements.
credit - ANSWER-The RIGHT side of an account. A decrease in asset and expense
accounts; an increase in liability, owners' equity, and revenue accounts.
debit - ANSWER-The LEFT side of an account. An increase in asset and expense
accounts; a decreases liability, owners' equity, and revenue accounts.
entry - ANSWER-A journal entry or a posting to an account
horizontal model - ANSWER-a representation of the balance sheet and income
statement relationship that is useful for understanding the effects of transactions and
adjustments on the financial statements.
journal - ANSWER-A chronological record of transaction.
journal entry - ANSWER-A description of a transaction in a format that shows the debit
account(s) and amount(s) and credit account(s) and amount(s).
