Accounting Unit 8

Which accounting concept applies when a work sheet is prepared at the end of each fiscal cycle to summarize the general ledger info needed to prepare financial statements?

Accounting Period Cycle

Information needed for closing entries is found in the

Income Statement and Balance Sheet columns of the work sheet

Which accounting concept applies when expenses are reported in the same fiscal period that they are used to produce revenue?

Matching Expenses with Revenue

Income Summary is

a temporary account

The journal entry to close the expense accounts is

debit Income Summary, for the total expenses; credit each expense account

The journal entry to close Income Summary when there is a net income is

debit Income Summary; credit owner's capital

The journal entry to adjust Prepaid Insurance is

debit Insurance Expense; credit Prepaid Insurance

The journal entry to adjust Supplies is

debit Supplies Expense; credit Supplies

Accounts used to accumulate information from one fiscal period to the next are

permanent accounts

The last step in the accounting cycle is to

prepare a post closing trial balance

After closing entries are posted, the owner's capital account balance should be the same as

shown on the balance sheet for the fiscal period

When the total expenses are greater than the total revenue

the income summary account has a debit balance

After adjusting entry for Supplies has been posted, Supplies expense has an up-to-date balance, which is the

value of supplies used during the fiscal period

Temporary accounts begin each new fiscal period with a

zero balance