ASSESS YOUR PROGRESS > Review Questions 1. Identify the three categories of the accou three categories of the accounting equation, and list at least four accounts associated with each category. What is the purpose of the chart of accounts? Explain the numbering typically associated with the accounts. 3. What does a ledger show? What's the difference between a ledger and the chart of accounts? 4. Accounting uses a double-entry system. Explain what this sentence means. 5. What is a T-account? On which side is the debit? On which side is the credit? Where does the account name go on a T-account? 6. When are debits increases? When are debits decreases? 7. When are credits increases? When are credits decreases? 8. Identify which types of accounts have a normal debit balance and which types of accounts have a normal credit balance. 9. What are source documents? Provide examples of source documents that a business might use. 10. Where are transactions initially recorded? 11. Explain the five steps in journalizing and posting transactions. 12. What are the four parts of a journal entry? 13. What is involved in the posting process? 14. What is the purpose of the trial balance? 15. What is the difference between the trial balance and the balance sheet? 16. If total debits equal total credits on the trial balance, is the trial balance error-free? Explain your answer. 17. What is the calculation for the debt ratio? Explain what the debt ratio evaluates