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Accounting Terms Dictionary

Double-entry method

Double-entry method


1. Accounting transactions are recorded by preparing journal entries.

2. Journal entries have at least one entry on each of (A) and (B).
(A) debit side
(B) credit side

3. Debit side refers to the left side of a journal entry.

4. Credit side refers t the right side of a journal entry.

5. An example of journal entry

Transaction
--> $100,000 cash was invested to start a business.

  debitcredit
cash100,000 
      owner's equity 100,000

This journal entry records an increase in cash of $100,000 and an increase in owner's equity of $100,000.

6. Asset accounts, such as cash, have normal balances on debit side.
--> an increase in asset accounts is recorded on debit side

7. Equity accounts, such as owner's equity, have normal balances on credit side.
--> an increase in equity accounts is recorded on credit side

8. Liability accounts, such as borrowings, have normal balances on credit side.
--> an increase in liability accounts is recorded on credit side

9. For all journal entries, total on debit side should be equal to total on credit side.
--> a journal entry balances when debit = credit

10. Accounting equation
--> assets = liabilities + equity

11. Revenue accounts, such as sales, have normal balances on credit side.
--> an increase in revenue accounts is recorded on credit side

12. Expense accounts, such as cost of sales, have normal balances on debit side.
--> an increase in expense accounts is recorded on debit side

13. An expanded version of accounting equation
--> assets + expenses = liabilities + equity + revenue
--> assets = liabilities + equity + revenue - expenses

14. Ending balance of equity = (C) + (D) - (E)
(C) Beginning balance of equity
(D) Revenue
(E) Expenses

15. Net income = revenue - expenses

16. An expanded version of accounting equation
--> assets = liabilities + equity + revenue - expenses
--> assets = liabilities + equity + net income

17. An example of accounting equation

Assets = $100,000
Liabilities = $30,000
Beginning balance of equity = ??
Revenue = $110,000
Expenses = $90,000
Net income = ???

assets = liabilities + equity + revenue - expenses
100,000 = 30,000 + ?? + 110,000 - 90,000

Beginning balance of equity = ?? = 50,000
net income = revenue - expenses = 110,000 - 90,000 = 20,000

assets = liabilities + equity + revenue - expenses
100,000 = 30,000 + 50,000 + 110,000 - 90,000 = 100,000

Ending balance of equity = beginning balance of equity + net income
= 50,000 + 20,000 = 70,000






Index of Accounting Terms Dictionary


U.S. GAAP by Codification Topic 
 
 105  GAAP Hierarchy 
 105  GAAP History 

 205  Presentation of Financial Statements 
 205-20 Discontinued Operations 
 210  Balance Sheet 
 210-20 Offsetting 
 220  Comprehensive Income 
 225  Income Statement 
 225-20 Extraordinary and Unusual Items 
 230  Statement of Cash Flows 
 250  Accounting Changes and Error Corrections 
 260  Earnings per Share 
 270  Interim Reporting
 
 310  Impairment of a Loan
 320  Investment Securities 
 320  Other-Than-Temporary Impairments, FSP FAS 115-2 
 320-10-05 Overview of Investments in Other Entities 
 320-10-35 Reclassification of Investments in Securities
 323-10 Equity Method Investments
 323-30 Investments in Partnerships and Joint Ventures 
 325-20 Cost Method Investments 
 330  Inventory

 340-20 Capitalized Advertising Costs 
 350-20 Goodwill 
 350-30 Intangibles Other than Goodwill 
 350-40 Internal-Use Software 
 350-50 Website Development Costs 
 360  Property, Plant and Equipment
 360-20 Real Estate Sales 
 
 410  Asset Retirement and Environmental Obligations 
 420  Exit or Disposal Cost Obligations 
 450  Contingencies 
 450-20 Loss Contingencies 
 450-30 Gain Contingencies
 480  Redeemable Financial Instruments 

 505-20 Stock Dividends, Stock Splits 
 505-30 Treasury Stock




 605  SEC Staff Accounting Bulletin, Topic 13 
 605-25 Revenue Recognition - Multiple Element Arrangements 
 
 715-30 Defined Benefit Plans - Pension
 718  Share-Based Payment 
 730  Research and Development 
 730-20 Research and Development Arrangements 

 805  Business Combinations  
 810  Consolidation 
 810  Noncontrolling Interests 
 810  Consolidation of Variable Interest Entities, SFAS 167 
 
 815  Derivatives and Hedging Overview 

 820  Fair Value Measurements  
 820  Fair value when the markets are not active, FSP FAS 157-4
 825  Fair Value Option 

 830  Foreign Currency Matters 
 830-20 Foreign Currency Transactions 
 830-30 Translation of Financial Statements 
 835  Interest 
 835-20 Capitalization of Interest 
 835-30 Imputation of Interest 

 840  Leases 
 840-20 Operating Leases 
 840-30 Capital Leases 
 840-40 Sale-Leaseback Transactions
 845  Nonmonetary Transactions 

 855  Subsequent Events 
 860-20 Sale of Financial Assets, SFAS 166 
 860-50 Servicing Assets and Liabilities, SFAS 156 

 985-20 Costs of software to be sold  





   IFRS 1 - IFRS 9
IFRS Overview
IFRS 1: First-time adoption of International Financial Reporting Standards
IFRS 2: Share-based payment
IFRS 3: Business combinations
IFRS 4: Insurance contracts
IFRS 5: Non-current assets held for sale and discontinued operations
IFRS 6: Exploration for and evaluation of mineral resources
IFRS 7: Financial instruments: disclosures
IFRS 8: Operating segments
IFRS 9: Financial Instruments





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