1. T-account – represent the general ledger –Double-entry bookkeeping Debit – the left side of an account. Credit – the right side of an account. –Assets – increase with debit, decrease with credit –Liabilities and shareholders’ equity are increased with credits and decreased with debits Journal - record in which transactions are initially recorded in chronological order Journal entry - record of a single transaction General ledger - primary record of a company’s financial information

2. Journalizing –Debits first, credits after - indented Posting - process of transferring the amount from the journal to the general ledger –Balance = bb + increases – decreases = eb Chart of accounts - list of all the accounts in a firm’s accounting records Retained earnings –Revenues - increased with credits and decreased with debits –Expenses - increased with debits and decreased with credits

3. Accounting cycle - steps an accountant follows to analyze and record business transactions, prepare the financial statements, and get ready for the next accounting period –analyze and record transactions in the journal –post the journal entries to the general ledger - posting – transferring the amounts from journal entries to the general ledger accounts –prepare an unadjusted trial balance at the end of the accounting period - trial balance is a list of all the accounts in the general ledger with the respective debit or credit balances at a given point in time

4. Working capital is a measure used to evaluate liquidity. –Working capital = Current assets – Current liabilities Quick ratio is a measure of a company’s ability to meet its short-term obligations. –It is also known as the acid-test ratio. –Quick ratio = Cash, accounts receivable, and short-term investments divided by current liabilities.

5. Errors in recording and posting journal entries can lead to inaccurate records and reports. –These errors can be costly. –Controls that can minimize the risk of these errors include: Input and processing controls Reconciliation and control reports Documentation to provide supporting evidence for the recorded transactions. Unauthorized access to the general ledger Loss of data in the general ledger

6. Assign #5 – pg. 131-134, E3-4A, E3-9A, E3- 11A, E3-13A, E3-14A Assign #6 – pg. 140, P3-5A