Section V: Fill In The Blanks — Debit And Credit

Section V Fill In The Blanks1 Debit 2 Credit

Fill in the blanks: 1. Debit = ______________. 2. Credit = _____________. 3. The general journal is the ______________________(book of original entry or the general ledger.) 4. The accrual basis of accounting records _______________when __________________ and ________________ when __________________. 5. The ________________ _________________ tries to match ________________with ____________________.

Paper For Above instruction

The principles of accounting revolve around correctly recording and reporting financial transactions to provide a true and fair view of an entity's financial position. The filling of blanks in accounting concepts tests foundational knowledge about the basic terminology and processes used in accounting systems. This paper discusses the key concepts associated with the fill-in-the-blank questions provided, including fundamental accounting definitions, the nature of journal entries, and the matching principle.

Firstly, the definitions of debit and credit are fundamental to understanding double-entry bookkeeping. Debit (Dr) and credit (Cr) are the two sides of every financial transaction, where the debit side generally indicates an increase in assets or expense accounts and a decrease in liabilities, equity, or revenue accounts. Conversely, the credit side typically reflects an increase in liabilities, revenue, or equity and a decrease in assets or expenses. Therefore, when prompted to fill in “Debit = ______________”, one would generally write “an increase in assets or expenses,” and for “Credit = _____________”, “an increase in liabilities, revenue, or equity” would be appropriate.

Secondly, the general journal is the primary book of original entry in accounting. It records all business transactions in chronological order before they are transferred to the respective accounts in the general ledger. Filling in “The general journal is the ______________________” correctly points to “book of original entry” as the fundamental function of this record-keeping tool.

Next, the accrual basis of accounting recognizes revenues when they are earned and expenses when they are incurred, regardless of when cash is received or paid. This principle ensures that financial statements reflect the true income and expenses of a specific period. Filling in “The accrual basis of accounting records _______________when __________________ and ________________ when __________________” results in “revenues when earned” and “expenses when incurred,” emphasizing the importance of timing in accrual accounting.

Finally, the matching principle is central to accrual accounting. It states that expenses should be recorded in the same period as the revenues they help generate, thus providing a more accurate picture of profitability. Filling in “The ________________ _________________ tries to match ________________with ____________________” involves completing “matching principle” with “expenses with revenues.”

Conclusion

Understanding these fundamental concepts equips accounting students and professionals with the ability to accurately record, classify, and interpret financial data. Mastery of basic terminology like debit and credit, familiarity with journal entries, and comprehension of accounting principles such as accrual basis accounting and the matching principle are essential for accurate financial reporting and analysis.

References

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  • Libby, T., Libby, R., & Short, D. G. (2019). Financial Accounting (10th ed.). McGraw-Hill Education.
  • United States Generally Accepted Accounting Principles (GAAP). Financial Accounting Standards Board (FASB). (2023).
  • AccountingTools. (2022). Definition of Journal. Retrieved from https://www.accountingtools.com
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  • Wikipedia Contributors. (2023). Accrual principle. Retrieved from https://en.wikipedia.org
  • American Institute of CPAs (AICPA). (2022). Code of Professional Conduct. AICPA.

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