Chapter 6 True and False

Financial information may be reported any time a business needs it.

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.

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.

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 correctly.

True

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

True

The value of the prepaid insurance coverage used during a fiscal period is an expense.

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.

True

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 balance of the supplies account plus the value of the supplies on hand equals the up-to-date balance of the supplies account.

False

The two accounts affected by the adjustment for insurance are Prepaid Insurance Expense and Insurance.

False

If 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

Journals, ledgers, and work sheets are considered permanent records.

False

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

False

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

False