Accounting Unit 8
Which accounting concept applies when a work sheet is prepared at the end of each fiscal cycle to summarize the general ledger info needed to prepare financial statements?
Accounting Period Cycle
Information needed for closing entries is found in the
Income Statement and Balance Sheet columns of the work sheet
Which accounting concept applies when expenses are reported in the same fiscal period that they are used to produce revenue?
Matching Expenses with Revenue
Income Summary is
a temporary account
The journal entry to close the expense accounts is
debit Income Summary, for the total expenses; credit each expense account
The journal entry to close Income Summary when there is a net income is
debit Income Summary; credit owner's capital
The journal entry to adjust Prepaid Insurance is
debit Insurance Expense; credit Prepaid Insurance
The journal entry to adjust Supplies is
debit Supplies Expense; credit Supplies
Accounts used to accumulate information from one fiscal period to the next are
permanent accounts
The last step in the accounting cycle is to
prepare a post closing trial balance
After closing entries are posted, the owner's capital account balance should be the same as
shown on the balance sheet for the fiscal period
When the total expenses are greater than the total revenue
the income summary account has a debit balance
After adjusting entry for Supplies has been posted, Supplies expense has an up-to-date balance, which is the
value of supplies used during the fiscal period
Temporary accounts begin each new fiscal period with a
zero balance