Accounting Ch. 6 #2
A financial statement that reports the value of a business's assets, liabilities, and owner's equity on a specific date.
Balance Sheet
Adjusting entries must be posted to the general ledger accounts. T or F
True
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. T or F
True
If the Trial Balance columns are not equal and the difference can be evenly divided by j9, then the error most likely is a transposed number. T or F
True
Net income on a work sheet is calculated by subtracting the Income statement debit column total from the income statement credit column total. T or F
True
The amount of the supplies used during a fiscal period is an expense. T or F
True
Two financial statements are prepared from the information on the work sheet. T or F
True
A columnar accounting form used to summarize the general ledger information needed to prepare financial statements.
Work Sheet
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. T or F
False
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. T or F
False
Reporting income when it is earned and expenses when they are incurred
Accrual Basis of Accounting
Journal entries recorded to update general ledger accounts at the end of a fiscal period.
Adjusting Entries
Changes recorded on a worksheet to update general ledger accounts at the end of a fiscal period.
Adjustments
Reporting income when the cash is received and expenses when the cash is paid
Cash Basis of Accounting
Many businesses choose a one-year fiscal period that ends during a period of high business activity. T or F
False
Only accounts with a balance are listed in the trial balance columns of a work sheet. T or F
False
The length of time for which a business summarizes financial information and reports its financial performance
Fiscal Period
A fiscal period consisting of 12 consecutive months.
Fiscal Year
A financial statement showing the revenue and expenses for a fiscal period
Income Statement
A proof of the equality of debits and credits in a general ledger
Net Income
The difference between total revenue and total expenses when total revenue is greater
Net Income
The difference between total revenue and total expenses when total expenses are greater
Net Loss
Cash paid for an expense in one fiscal period that is not used until a later period.
Prepaid Expense