Accounting Ch. 6 Study Guide Test Answers

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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 statments
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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 a fiscal period
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Adjustments
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A financial statement that reports 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 wen total expenses are greater
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Net loss
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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 he next year.
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False
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True or False: An accounting period is known as a fiscal period
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True
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True or False: Journals, ledgers, and work sheets are considered permanent records
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False
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True or False: All general ledger account titles are listed on a trial balance in the same order as listed on the cart of accounts
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True
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True or False: The four questions asked when analyzing an adjustment are: Why? Where? When? and How?
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False
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True or False: The two accounts affected by the adjustment for supplies are Supplies and Supplies Expense
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True
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True or False: The two accounts affected by the adjustment for insurance are Prepaid Insurance Expense and Insurance
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False
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True or False: Totaling and ruling the Adjustments column of a work sheet are necessary to prove the equality of debits and credits
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True
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True or False: Two financial statements are prepared from the information on the work sheet
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True
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True or False: Net income on a work sheet is calculated by subracting the Income Statement Credit column total from the Income Statement Debit column total
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False
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True or False: 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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True or False: When two column totals are not in balance on the work sheet, the difference between totals is calculated and checked
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True
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True or False: 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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True or False: 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
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True
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True or False:Errors in general ledger accounts should never be erased
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True
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True or False: Most errors occur in doing arithmetic
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True
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True or False: The best way to prevent errors is to use a calculator
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False
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True or False: Many businesses choose a one-year fiscal period that ends during a period of high business activity
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False
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True or False: Making adjustments to general ledger accounts is an application of the Matching Expenses with Revenue account concept
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True
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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
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False
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True or False: The value of the prepaid insurance coverage used during a fiscal period is an expense
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True
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True or False: When Income Statement Credit column total is greater than the Income Statement Debit column total on a work sheet, the business has a net income
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True
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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
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True
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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
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True
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True or False: The accounting concept Consistent Reporting is being applied when a word processing service business reports revenue per page from the information on the work sheet
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False
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True or False: Two financial statement are prepared from the information on the work sheet
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True
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True or False: Net income on a work sheet is calculated by subtracting the Income Statement Debit column total
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False
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True or False: If there are errors in the work sheet’s Trial Balance columns, it might be because not all general ledger accounts balances were copied in the Trial Balance column correctly
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True
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Following the same accounting procedures in the same way in each accounting period is an application of the accounting concept _____.
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Consistent Reporting
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Reporting changes in financial information for specific period of time in the the form of financial statements is an applications of the accounting concept _____.
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Accounting Period Cycle
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On a trial balance, _____.
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all general ledger account titles are listed
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Recording revenue from business activities and expenses associated with earning that revenue in the same accounting period is a application of the accounting concept _____.
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Matching Expenses with Revenue
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On a work sheet, the balance of the owner’s capital account is extended to the _____.
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Balance Sheet Credit column
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A net loss is entered in the work sheets _____.
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Income Statement Credit and Balance Sheet Debit columns
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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 _____.
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an amount that has not been extended
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If the Trial Balance columns are not equal and the difference is 1, the error often is _____.
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in addition

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