Glossary
| Term | Definition |
|---|---|
| Accounting Equation | Assets = Liabilities + Equity — the foundation of every accounting system. |
| Debit | The side of an entry that increases assets and expenses, and decreases liabilities, equity, and revenue. |
| Credit | The side of an entry that increases liabilities, equity, and revenue, and decreases assets and expenses. |
| Journal Entry | Recording a transaction as a debit and a credit of equal value. |
| Ledger | The collection of every entry for every account in one place (T-accounts). |
| Trial Balance | A list of every account and its balance, confirming total debits equal total credits. |
| Accrual Basis | Recording revenue/expenses when they occur economically, regardless of cash movement. |
| Cash Basis | Recording a transaction only when cash actually moves. |
| Matching Principle | Matching revenues with the expenses tied to generating them, in the same period. |
| Chart of Accounts | The full list of accounts a company uses in its accounting system. |
| Adjusting Entry | A period-end entry that corrects balances before the financial statements are prepared. |