Accounting Chapter 6

T/F: Adjusting entries must be posted to the general ledger accounts.

True

Define Income Statement.

A financial statement showing the revenue and expenses for a fiscal period.

T/F: If an amount is written in an incorrect column of a work sheet, the error should be erased and the amount should be written in the correct column.

True

T/F: If the Trial Balance columns are not equal and the difference can be evenly divided by 9, then the error most likely is a transposed number.

True

T/F: If an amount is written in an incorrect column on a work sheet, a line should be drawn through the incorrect amount and the correct amount should be written in the correct column.

False

T/F: In the difference between the totals of Debit and Credit columns on a work sheet can be evenly divided by 9, then the error is most likely in addition.

False

T/F: Only accounts with a balance are listed in the Trial Balance columns of a work sheet.

False

The difference between total revenue and total expenses when total expenses are greater is ___________________.

Net Loss

What is accrual basis of accounting?

Reporting income when it is earned and expenses when they are incurred.

Define Net Income

The difference between total revenue and total expenses when total revenue is greater.

T/F: Making adjustments to general ledger accounts is an application of the Matching Expenses with Revenue accounting concept.

True

T/F: Net income on a work sheet is calculated by subtracting the Income Statement Debit column total from the Income Statement Credit column total.

True

T/F: The amount of the supplies used during a fiscal period is an expense.

True

T/F: The two accounts affected by the adjustment for supplies are Supplies and Supplies Expense.

True

What is cash basis of accounting?

Reporting income when the cash is received and expenses when the cash is paid.

T/F: Journals, ledgers, and work sheets are considered permanent records.

False

A fiscal period consisting of 12 consecutive months is ___________________________________.

Fiscal Year

What is a trial balance?

A proof of the equality of debits and credits in a general ledger.

T/F: The accounting concept Consistent Reporting is being applied when a word processing service business reports revenue per page one year and revenue per hour the next year.

False

T/F: The balance of the Supplies account plus the value of the supplies on hand equals the up-to-date balance of the Supplies account.

False

T/F: When the Income Statement Debit column total is greater than the Income Statement Credit column total on a work sheet, the business has a net income.

False

The length of time for which a business summarizes financial information and reports its financial performance is ______________________________.

Fiscal Period

T/F: Many businesses choose a one-year fiscal period that ends during a period of high business activity.

False

T/F: If the Trial Balance columns are not equal and the difference is $50.00, the error is a $25.00 amount written in the wrong column.

True

T/F: Two financial statements are prepared from the information on the work sheet.

True