Accounting Chapter 6

On a work sheet, the balance of the owner's capital account is extended to the_____.

Balance Sheet Credit column

True or False: The two accounts affected by the adjustment for insurance are Prepaid Insurance Expense and Insurance.

false

The length of time for which a business summarizes and reports financial information

fiscal period

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

trial balance

True or False: All general ledger account titles are listed on a trial balance in the same order as listed on the chart of accounts.

true

True or False: An accounting period is known as fiscal period.

true

True or False: Errors in the general ledger accounts should never be erased.

true

True or False: 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

True or False: If errors are found on a work sheet, they must be erased and corrected before any further work is completed.

true

True or False: 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

True or False: If there are any 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 column correctly.

true

True or False: Making adjustments to a general ledger accounts is an application of the Matching Expenses with Revenue accounting concept.

true

True or False: Most errors occur in doing arithmetic.

true

True or False: The two accounts affected by the adjustment for supplies are Supplies and Supplies Expense.

true

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

true

True or False: Totaling and ruling the Adjustments columns of a work sheet are necessary to prove the equality of debits ad credits.

true

True or False: Two financial statements are prepared from the information on the work sheet.

true

True or False: When the Income Statement Credit column total is greater than the Income Statement Debit total on a worksheet, the business has a net income.

true

True or False: When two column totals are not in balance on the work sheet, the difference between totals is calculated and checked.

true

A columnar accounting form used to summarize the general ledger information needed to prepare financial statements

work sheet

True or False: If the difference between the totals of Debit and Credit columns on a worksheet can be evenly divided by 9, then the error is most likely in addition.

false

True or False: Journals, ledgers, and work sheets are considered permanent records.

false

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

false

True or False: Net income on a worksheet is calculated by subtracting the Income Statement Credit column total from the Income Statement Debit column total.

false

True or False: The accounting concept Consistent Reporting is being applied when a delivery business reports the number of deliveries made one year and the amount of revenue received for deliveries made the next year.

false

True or 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

True or False: The best way to prevent errors is to use a calculator.

false

True or False: The four questions asked when analyzing an adjustment are: Why? Where? When? and How?

false

Reporting changes in financial information for a specific period of time in the form of financial statements is an application of the accounting concept_____.

Accounting Period Cycle

Following the same accounting procedures in the same way in each accounting period is an application of the accounting concept_____.

Consistent Reporting

A net loss is entered in the work sheet's_____.

Income Statement Credit and Balance Sheet Debit columns

Recording revenue from business activities and expenses associated with earning that revenue in the same accounting period is an application of the accounting concept_____.

Matching Expenses with Revenue

Changes recorded on a worksheet to update general ledger accounts at the end of a fiscal period

adjustments

On a trial balance,_____.

all general ledger account titles are listed

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_____.

an amount that has not been extended

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

balance sheet

If the Trial Balance columns are not equal and the difference is 1, the error often is_____.

in addition

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

income statement

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