Accounting Chapter 6 true and false

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a fiscal period must be 12 months in length

false

a proof of equality of debits and credits in a general ledger is called a final balance

false

changes are made in general ledger accounts before adjustments are journalized and posted

false

errors on the work sheet should never be erased

false

journals, ledgers, and work sheets are considered permanent records

false

most errors occur in writing number, rather than in doing arithmetic

false

only accounts with a balance are listed on a trial balance

false

only general ledger accounts that have balances are listed on the work sheet's trial balance

false

a balance sheet reports assets, liabilities, and owner's equity on a specific date

true

adjusting entries must be posted to the general ledger accounts

true

adjustments are changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period

true

after all adjustments are recorded, the totals of the work sheet's Adjustments Debit and Credit columns must be the same

true

because a work sheet is not considered a permanent accounting record, it is prepared in pencil

true

errors in the work sheet's Income Statement and Balance Sheet columns might be caused by extending account balances to the incorrect Income Statement or Balance Sheet column

true

financial information is always summarized and reported at the end of a fiscal period

true

if errors are found on a work sheet, they must be erased and corrected before any further work is completed

true

if the difference between the totals of Debit and Credit columns on a work sheet can be evenly divided by 9, look for transposed numbers as a source of errors

true

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 a transposed number

true

if there are errors in the work sheet's Trial Balance columns, it might be because a general ledger account balance was recorded in the wrong Trial Balance column

true

most errors occur in doing arithmetic

true

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

true

the balance in Prepaid Insurance after adjusting entries are recorded represents the amount of insurance premium still remaining

true

the balance in Supplies Expense after adjusting entries are recorded represents the amount of supplies used during the fiscal period

true

the heading on a work sheet contains the name of the business, the name of the report, and the date of the report

true

the two accounts affected by the adjustment for supplies are Supplies and Supplies Expense

true

totaling and ruling the Adjustments columns of a work sheet are necessary to prove the equality of debits and credits

true

when two column totals are not in balance on the work sheet, the difference between the two totals is calculated and checked

true

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

false

the amount of net income is recorded in the Income Statement Credit column and extended to the Balance Sheet Debit column

false

the best way to prevent errors is to use a calculator

false

the difference between total revenue and total expenses when total expenses are greater is called a net gain

false

the four questions asked when analyzing an adjustment are: why? where? when? and how?

false

the income statement and balance sheet are prepared from the Trial Balance columns on the work sheet

false

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

false


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