Chapter 6
b. Income Statement Credit and Balance Sheet Debit columns
A net loss is entered in the work sheet's ____.
False
All account balances are written in the Trial Balance Credit column.
False
All fiscal periods are one year long.
False
All fiscal periods must begin on January 1.
True
All general ledger account titles are listed on a trial balance even if some accounts do not have a balance.
True
All general ledger account titles are listed on a trial balance in the same order as listed on the chart of accounts.
d. adjustments
Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period are ____.
False
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
The adjustment for prepaid insurance is a debit to Prepaid Insurance and a credit to Insurance Expense.
False
The balance of the supplies account plus the value of the supplies on hand equals the up-to-date balance of the supplies account.
True
The column in which an account balance is recorded on a trial balance shows whether the account has a debit or credit balance.
False
The four questions asked when analyzing an adjustment are: Why? Where? When? and How?
False
The two accounts affected by the adjustment for insurance are Prepaid Insurance Expense and Insurance.
True
The value of the prepaid insurance coverage used during a fiscal period is an expense.
c. a work sheet
A columnar form used to summarize general ledger information needed to prepare financial statements is ____.
True
Financial information may be reported any time a business needs it.
c. Consistent Reporting
Following the same accounting procedures in the same way in each accounting period is an application of the accounting concept ____.
c. an amount that has not been extended
If a pair of work sheet columns do not balance and the difference between the totals is an amount that appears elsewhere on the work sheet, the error is probably ____.
True
If an amount is written in an incorrect column on a work sheet, the error should be erased and the amount should be written in the correct column.
a. in transposed numbers or a "slide"
If the Trial Balance columns are not equal and the difference can by divided evenly by 9, the error most likely is ____.
True
If the Trial Balance columns are not equal and the difference is $50.00, the error most likely is a $25.00 amount written in the wrong column.
d. in addition
If the Trial Balance columns are not equal and the difference is 1, the error often is ____.
True
If there are errors in the work sheet's Trial Balance columns, it might be because not all general ledger account balances were copied in the Trial Balance columns correctly.
False
Journals, ledgers, and work sheets are considered permanent records.
True
Making adjustments to general ledger accounts is an application of the Matching Expenses with Revenue accounting concept.
False
Many businesses choose a one-year fiscal period that ends during a period of high business activity.
True
Most businesses use a fiscal period of one year because tax reports must be made at least once a year.
True
Most errors occur in doing arithmetic.
False
Net income on a work sheet is calculated by subtracting the Income Statement Credit column total from the Income Statement Debit column total.
a. all general ledger account titles are listed
On a trial balance, ____.
a. Balance Sheet Debit column
On a work sheet, the balance of Cash is extended to the ____.
c. Income Statement Credit column
On a work sheet, the balance of an expense account is extended to the ____.
d. Income Statement Credit column
On a work sheet, the balance of the Sales account is extended to the ____.
b. Balance Sheet Credit column
On a work sheet, the balance of the owner's capital account is extended to the ____.
a. Matching Expenses with Revenue
Recording revenue from business activities and expenses associated with earning that revenue in the same accounting period is an application of the accounting concept ____.
b. Accounting Period Cycle
Reporting changes in financial information for a specific period of time in the form of financial statements is an application of the accounting concept ____.
True
Two financial statements are prepared from the information on the work sheet.
True
When the Income Statement Credit column total is greater than the Income Statement Debit column total on a work sheet, the business has a net income.
a. net income
When total revenue is greater than total expenses, the difference is a ____.
True
When two column totals are not in balance on the work sheet, the difference between the two totals is calculated and checked.
