Accounting Chapter 6 Terms/True False – Flashcards
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The length of time for which a business summarizes and reports financial information.
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Fiscal Period
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A columnar accounting form used to summarize the general ledger information needed to prepare financial statements.
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Work Sheet
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A proof of equality of debits and credits in a general ledger.
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Trial Balance
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Changes recorded on a work sheet to update general ledger accounts at the end of fiscal ledger.
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Adjustments
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A financial statement that records assets, liabilities, and owner's equity on a specific date.
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Balance Sheet
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A financial statement showing the revenue and expenses for a fiscal period.
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Income Statement
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The difference between total revenue and total expenses when total revenue is greater.
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Net Income
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The difference between total revenue and total expenses when total expenses is greater.
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Net Loss
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The accounting concept "Consistent Reporting" is being applied when a delivery business reports the number os deliveries made one year and the amount of revenue received for deliveries made the next year.
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False
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An accounting period is also known as a fiscal period.
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True
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Journals, ledgers, and work sheets are considered permanent records.
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False
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All general ledger account titles are listed on a trial balance in the same order as listed on the chart of accounts.
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True
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The four questions asked when analyzing an adjustment are: Why? Where? When? and How?
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False
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The two accounts affected by the adjustment for supplies are Supplies and Supplies Expense.
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True
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The two accounts affected by the adjustment for insurance are Prepaid Insurance Expense and Insurance.
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False
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Totaling and ruling the Adjustments columns of a work sheet are necessary to prove the equality of debits and credits.
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True
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Two financial statements are prepared from the information on the work sheet.
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True
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Net income on a work sheet is calculated by subtracting the Income Statement Credit column total from the Income Statement Debit column total.
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False
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If errors are found on a work sheet, they must be erased and corrected before any further work is completed.
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True
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When two column totals are not in balance on the work sheet, the difference between the two totals is calculated and checked.
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True
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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.
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False
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If there are errors in the work sheet's Trial Balance columns, it might be because not all general ledger account balances were extended into the Trial Balance column correctly.
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True
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Errors in general ledger accounts should never be erased.
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True
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The best way to prevent errors is to work carefully; when possible, use a calculator.
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True
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Most errors occur in doing arithmetic.
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True
