Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 64

Following are a number of the key terms and concepts introduced in the chapter, along with a list of corresponding definitions. Match the appropriate letter for the key term or concept to each definition provided (items 1–15). Note that not all key terms and concepts will be used.

a. Balance sheet equation	h. Account
b. Transactions	i. Chart of accounts
c. On account	j. T-account
d. Accrued (or accrual)	k. Account balance
e. Journal	l. Debit
f. Post (posting)	m. Credit
g. Ledger	n. Entry
o. Balance	s. Adjusting journal entry
p. Charge	t. Closing the books
q. Journal entry	u. Transaction analysis methodology
r. Source document

____________ The right side of an account; a decrease in asset and expense accounts or an increase in liability, owners’ equity, and revenue accounts.

Step 1 of 3

Debit and Credit

In double entry bookkeeping system, every debit has an equal and opposite credit. Whether a particular transaction in an account will be debited or credited to increase the same, depends on the nature of account as it is the nature of the account, which defines the rule to be followed out of the 3 golden rules of accounting.

Real Accounts: It is used to show the treatment of the assets of a company, be it tangible or intangible. The rule is Debit what comes in, credit what goes out.

Personal Accounts: This is used to relate the persons the company deals with, Rule is Debit the receiver, Credit the giver.

Nominal Accounts: This account shows the treatment which is related to the expenses, gains, income, and losses. The rule is Debit all expenses or loss, Credit all income, gains or profit.