Century 21 Accounting 9E - Chapter 6 (multicolumn)

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

Balance Sheet Credit column

(T/F) Two financial statements are prepared from the information on the work sheet.

T (Balance Sheet and Income Statement)

net loss

The difference between total revenue and total expenses when total expenses are greater

trial balance

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

four reasons to use a work sheet

1) summarize general ledger balances to prove they equal 2) plan needed changes to general ledger accts to bring acct balances up to date 3) separate general ledger balances according to the financial statements to be prepared 4) calculate the amt of net income or net loss for a fiscal period

work sheet

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

income statement

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

balance sheet

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

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 each accounting period is an example of the accounting concept of

Consistent Reporting

(T/F) If the Trial Balance columns are not equal and the difference is $50, the error most likely is a $25 amount written in the wrong column.

F

(T/F) Many businesses choose a one-year fiscal period that ends during a period of high business activity.

F

(T/F) The balance of the supplies account plus the value of supplies on hand equals the up-to-date balance of the supplies account.

F

(T/F) Net income on a work sheet is calculated by subtracting the Income Statement Credit column total from the Income Statement Debit column total

F (Income Statement Credit Column {Sales} minus Income Statement Debit Column{expenses})

(T/F) 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.

F (must report the same way every time)

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

(T/F) 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.

T

(T/F) 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 column correctly.

T

(T/F) Making adjustments to general ledger accounts is an application of the Matching Expenses with Revenue accounting concept.

T

(T/F) The value of the prepaid insurance coverage used during a fiscal period is an expense

T

(T/F) 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

T

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

Accounting Period Cycle Concept

changes in financial information are reported for a specific period of time in the form of financial statements

adjustments

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

If the trial balance columns do not equal and the difference is 1 the error is likely?

in addition

Matching Expenses with Revenue Concept

revenue from business activities and expenses associated with earning that revenue are recorded in the same accounting period

net income

the difference between total revenue and total expenses when total revenue is greater

fiscal period

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

Consistent Reporting Concept

the same accounting procedures are followed in the same way in each accounting period