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A general ledger is a comprehensive record of a company's financial transactions over its lifetime, serving as the foundation for preparing financial statements. It categorizes transactions into accounts such as assets, liabilities, equity, revenues, and expenses, ensuring the accuracy and completeness of financial data.
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Concept
Double-entry bookkeeping is an accounting system where each financial transaction is recorded in at least two accounts, ensuring the accounting equation (Assets = Liabilities + Equity) remains balanced. This method enhances accuracy and facilitates error detection by providing a complete view of an entity's financial activities through debits and credits.
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A trial balance is a bookkeeping report that lists the balances of all ledger accounts at a particular point in time, ensuring that total debits equal total credits. It serves as a preliminary step in the preparation of financial statements, helping to identify any discrepancies in the accounting records.
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A Chart of Accounts (COA) is an organized listing of all the accounts used by a business to record financial transactions, serving as the backbone of its accounting system. It provides a structured framework that categorizes financial data, enabling efficient financial reporting and analysis.
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Debits and credits are fundamental components of the double-entry accounting system, where each financial transaction affects at least two accounts, maintaining the accounting equation's balance. Debits increase asset or expense accounts and decrease liability, revenue, or equity accounts, while credits do the opposite.
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Financial statements are formal records that provide an overview of a company's financial performance and position, crucial for stakeholders to make informed decisions. They typically include the balance sheet, income statement, and cash flow statement, each offering unique insights into different aspects of the company's financial health.
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Journal entries are fundamental accounting records that document each financial transaction of a business, ensuring that every transaction is accurately recorded in the company's books. They typically include the date, accounts impacted, amounts debited and credited, and a brief description, forming the basis for the double-entry bookkeeping system.
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Account reconciliation is the process of comparing financial records from different sources to ensure accuracy and consistency, crucial for maintaining the integrity of financial statements. It helps in identifying discrepancies, preventing fraud, and ensuring compliance with accounting standards and regulations.
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Accrual accounting is an accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash transactions occur. This approach provides a more accurate financial picture of a company's performance over time compared to cash accounting, which only records transactions when cash changes hands.
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Ledger accounts are fundamental components of the double-entry bookkeeping system, serving as the detailed records of all financial transactions of a business. Each account tracks specific categories of assets, liabilities, equity, revenues, or expenses, ensuring accuracy and transparency in financial reporting.
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A subsidiary ledger is a detailed ledger that contains a group of related accounts, providing supporting details for a general ledger control account. It enhances the organization and accuracy of financial data by breaking down complex transactions into more manageable components, facilitating better tracking and reconciliation of financial information.
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Payroll journal entries are accounting records that document the financial transactions related to employee compensation, including wages, salaries, bonuses, and deductions. These entries ensure accurate financial reporting by systematically tracking payroll expenses and liabilities, which are crucial for compliance with tax regulations and financial audits.
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The post-closing trial balance is a financial report prepared after closing entries are made, ensuring that debits equal credits and all temporary accounts are reset to zero for the new accounting period. It serves as a verification step to confirm that the general ledger is correctly balanced and ready for the next accounting cycle.
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Ledger balancing is the process of ensuring that all debits and credits in a ledger are equal, confirming the accuracy of financial records. It is a fundamental practice in accounting to maintain integrity and reliability in financial reporting and decision-making.
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In accounting, debits and credits are the fundamental building blocks used to record transactions in the double-entry bookkeeping system, ensuring that the accounting equation (Assets = Liabilities + Equity) remains balanced. Debits increase asset or expense accounts and decrease liability, revenue, or equity accounts, while credits do the opposite.
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Business transactions are the backbone of commerce, involving the exchange of goods, services, or money between parties, which can be individuals, companies, or organizations. These transactions are governed by legal agreements and are essential for the operation and growth of businesses, impacting financial statements and tax obligations.
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Payment reconciliation is the process of matching transactions recorded in a company's ledger with corresponding entries in bank statements to ensure accuracy and consistency in financial records. It is crucial for detecting discrepancies, preventing fraud, and maintaining the integrity of financial reporting.
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Double-entry accounting is a foundational financial accounting method that ensures the accounting equation (Assets = Liabilities + Equity) remains balanced by recording each transaction in at least two accounts, as debits and credits. This system provides a comprehensive view of financial transactions, enhancing accuracy and enabling detailed financial analysis and reporting.
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