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Chapter 3
The Double-Entry Framework
Term | Definition |
---|---|
Double-Entry Accounting | A system in which each transaction has a dual effect on the accounting elements. |
Balance | The difference between the footings of an account. |
Footings | The total dollar amounts on the debit and credit sides of an account. |
Debit | To enter an amount on the left side of an account. |
Credit | To enter an amount on the right side of an account. |
Normal Balance | The side of an account that is increased. |
Debit Balances | The normal balance of asset, expense, and drawing accounts. |
Credit Balances | The normal balance of liability, owner's equity, and revenue account. |
Trial Balance | A list of all accounts, showing the title and balance of each account, used to prove that the sum of the debits equals the sum of credits. |